Iceland’s latest bailout

Following week-long talks with the International Monetary Fund, Iceland have secured their emergency bailout to the tune of $2.1 billion as both the foreign exchange market and the banking system have collapsed.

Iceland have already called on the 200 million euros that was made available to them by the central bank of Norway, although further swap deals with Norway and fellow Nordic neighbours, Denmark, may mean that another 500 millions euros may be made available.

Since the UK, back in 1976, Iceland is the first European nation to call on the Fund as hyperinflation and mass unemployment are seemingly only just around the corner as the Gross Domestic Product is expected to shrink by as much as 10 percent over the next year.

Due to the size of the island and the relative scale of its economy compared to its financial services, has meant that the government has not been able to bailout its banks unlike the US and UK have been able to.

The funding programme will be used to stabilise the krone and develop the necessary infrastructure to develop and maintain a healthier financial system.

This program will enable Iceland to secure funding and gain access to the necessary technical expertise required to stabilise the krone and to provide support for the development of a healthier financial system.

Prime Minister, Geir Haarde, said that the Iceland is aiming to use the funds for sustainable long-term economic policy.

Earlier this month, Iceland nationalised its three largest banks, Kaupthing Bank hf, Landsbanki hf and Glitnir Bank hf.

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