When the Global Crisis struck in September 2008, all eyes were on the US (Eichengreen and Baldwin 2008). Iceland, however, was the first country to really suffer. Its three major banks collapsed in the same week in October 2008, and it became the first developed country to request assistance from the IMF in 30 years.
Iceland’s post-Crisis economy: A myth or a miracle?
Jon Danielsson, 21 May 2013
Deposit insurance after Iceland and Cyprus
Anne Sibert, 2 April 2013
The facts are now well known. The largest banks in Cyprus are insolvent, but too big for the government of Cyprus to save – at least if it wanted to avoid the ‘double drowning’ fate of Ireland. The government, trying to rescue banks, found itself needing a rescue.
The capital controls in Cyprus and the Icelandic experience
Jon Danielsson, 28 March 2013
The Cypriot government, European authorities and the IMF have concluded that capital controls are the best way to prevent a total collapse of the Cypriot financial system. Motivated by the obvious fear that anybody with money left over in Cyprus will seek to take their money out as soon as possible, temporary capital controls are to be put in place to prevent this.
Constitution making in action: The case of Iceland
Thorvaldur Gylfason, 1 November 2012
Strangely, democratic states often allow tiny minorities to get away with murder by exploiting the masses, big time. In Europe and the US, there is presently a fairly widespread feeling that this is what many bankers have done (Johnson and Kwak 2010). So let’s begin with a counterfactual thought experiment.
Finance and constitutions
Thorvaldur Gylfason, 11 April 2012
In his 2009 book, The Regulatory Response to the Financial Crisis, Charles Goodhart discusses the financial crisis, what went wrong, and what needs to be done (Goodhart 2009). The standing assumption is that regulatory reforms will rest at their current level of law, namely regulatory bodies and rules approved by lawmakers.
Capital controls are exactly wrong for Iceland
Jon Danielsson, Ragnar Arnason, 14 November 2011
There is a curious difference between how foreign and local economists see the wisdom of capital controls in Iceland. In a recent IMF-government of Iceland conference1, two Nobel Prize winners in economics, along with senior IMF representatives, expressed strong support for the capital controls.
Iceland’s programme with the IMF 2008–11
Friðrik Már Baldursson, 8 November 2011
When Iceland’s three main banks collapsed on 7–9 October 2008 it became obvious that Iceland would suffer a balance-of-payments crisis unless it could get outside support. A currency crisis was already under way (Figure 1). After some initial doubts it became clear to the government that it had no other option than to seek help from the IMF.
Was the IMF programme in Iceland successful?
Jon Danielsson, 27 October 2011
Iceland has just become the first industrialised country to graduate from an IMF programme in over 30 years. The IMF claims the programme has been an unqualified success:
How not to resolve a banking crisis: Learning from Iceland’s mistakes
Jon Danielsson, 26 October 2011
The Icelandic banking system collapsed in October 2008 and its three internationally active banks were taken over by the government. Disregarding best international practice, the government opted to restructure the banks on national grounds.
From crisis to constitution
Thorvaldur Gylfason, 11 October 2011
Political upheaval is the most common precursor of constitutional change. The collapse of communism in 1989 produced a large number of new constitutions in East and Central Europe and Asia (Elster 1995). Economic crises are less common triggers of constitutional change.
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