Abstract
When Iceland separated from Denmark in 1918 and became a sovereign nation with an independent currency, the people were enthusiastically prepared for nationhood. The economic grounds for the separation were shakier. Iceland depended on a single export industry – fishing – and was thus at the mercy of global market fluctuations. For decades afterwards, the fishing sector remained the national breadwinner. It was a shielded if simple life, but it ended in about 1989 when the North Atlantic cod stock collapsed and the fishing sector teetered on bankruptcy. The economic reforms that followed transformed Iceland from one of the most secluded, state-controlled nations in Western Europe to one of the most liberal and open, and it took just over ten years. These reforms – focused on privatization and corporate tax cuts – reaped great rewards through the 1990s in terms of new growth and prosperity.
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Notes
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For an overview see: National Audit Office (2010, December 15). Maintaining the financial stability of UK banks: update on the support schemes. (Report by the comptroller and auditor general, HC 676, Session 2010–2011). https://www.nao.org.uk/wp-content/uploads/2010/12/1011676.pdf
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- 41.
According to new banks’ initial balance sheets, published at the end of 2009 and the beginning of 2010, their total assets amounted to about €14 billion (ISK 2100 billion), as compared with the old banks’ consolidated assets of €96 billion (ISK 14,400 billion) as of mid-2008.
- 42.
This statement was never enshrined in law.
- 43.
Domestic deposits totalled €9.6 billion (ISK 1438 billion), and the recoveries of the failed banks’ estates average about 49 %. General creditors therefore compensated domestic depositors in the amount of about 51 % of total deposits. The banks’ parent companies’ foreign loans amounted to the equivalent of some €9.5 billion (ISK 1421 billion).
- 44.
The Central Bank of Iceland (2010, September 19). FIH to be sold to a consortium of ATP, PFA, Folksam and CPDyvig. (Press release No. 26/2010). http://www.cb.is/publications/news/news/2010/09/19/FIH-to-be-sold-to-a-consortium-of-ATP--PFA--Folksam-and-CPDyvig-/.
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Thorsteinsson, Vidar. (2016). Iceland’s Revolution. The Jacobin magazine, 20. https://www.jacobinmag.com/2016/03/iceland-banking-finance-icesave-left-greens/
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The Independence Party (2011, November 20). Drög að stjórnmálaályktun 40. landsfundar Sjálfstæðisflokksins. (Draft political resolution of the 40th national convention of the Independence Party.) http://www.xd.is/media/xd/landsfundur-2011/Stjornmalaalyktun-loka.pdf
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See Bruce Yandle, “Rahm’s Rule of Crisis Management: A Footnote to the Theory of Regulation”, February 11, 2013, The Foundation for Economic Education. http://fee.org/articles/rahms-rule-of-crisis-management-a-footnote-to-the-theory-of-regulation/#axzz2KizozPJ4
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Shakespeare, William. (1623). The Tragedy of Macbeth. Act 5, Scene 5.
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Jónsson, Á., Sigurgeirsson, H. (2016). Reykjavik on the Thames. In: The Icelandic Financial Crisis. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-39455-2_3
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