Iceland faces the music

Gylfi Zoega 27 November 2008

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Iceland’s borrowing in international credit markets during the period 2003-2007 propelled a macroeconomic expansion as well as the very rapid expansion of the banking sector.1 Borrowing was also undertaken to fund leveraged buy-outs of foreign companies as well as the buying of domestic assets. There developed the biggest stock market bubble in the OECD while house prices doubled.

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Topics:  Europe's nations and regions Financial markets

Tags:  EU, Iceland, banking collapse

Iceland: The future is in the EU

Philip Lane 06 November 2008

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Iceland is undergoing a traumatic financial crisis. In just a few weeks, it has seen the collapse of its currency and its banking system, plus a spectacular decline in its international reputation and its diplomatic relations with long-standing international partners. Much of the current debate revolves around the attribution of blame for its predicament, and there is certainly much to be learned from a rigorous forensic enquiry into the origins and mechanics of the crisis.

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Topics:  Europe's nations and regions Financial markets

Tags:  euro, EU, Iceland, banking collapse

The collapse of Iceland’s banks: the predictable end of a non-viable business model

Willem Buiter, Anne Sibert 30 October 2008

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Early in 2008 we were asked by the Icelandic bank Landsbanki (now in receivership) to write a paper on the causes of the financial problems faced by Iceland and its banks, and on the available policy options for the banks and the Icelandic authorities.

We sent the paper to the bank towards the end of April 2008; it was titled:

“The Icelandic banking crisis and what to do about it: the lender of last resort theory of optimal currency areas.”

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Topics:  Europe's nations and regions Financial markets

Tags:  Iceland, banking collapse