Afloat againHAVING nearly capsized in the stormy seas of international capital flows, Iceland is now making a cautious foray back into the water. On June 8th the government announced the lifting of the controls the country imposed in 2008—with one big caveat.
Investors with money tied up in Icelandic assets will soon be able to move it out of the country, and Icelanders will be free to buy foreign currencies. The hitch is that those who are owed money by the estates of Iceland’s failed banks, worth about 500 billion kronur ($3.8 billion), or 30% of GDP, must agree to haircuts and maturity extensions on the debts involved before they can sell them and transfer the proceeds out of the country. Alternatively, they must pay a tax of 39% before doing so.
There will also be auctions to drain foreign investors’ offshore holdings of kronur, preventing uncontrolled sales that might send the currency tumbling. Foreigners with kronur stuck abroad will now be able to put them in term-deposit accounts, swap them for bonds, or buy euros at a discount. All of these measures are designed to slow the inevitable rush to...
from The Economist: Finance and economics http://ift.tt/1TdLz72
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