Icelandic people will try. But current Red Green government is against us and it can only get worst after IMF ( which was a restraining influence on the craziest Leftist ideas ) has gone.

Specifics of bad policies against our Jón Jónsson that does want to start his own busienss we have already seen since 2009 :
http://www.icenews.is/index.php/2011/08/16/11-cases-of-iceland-krona-exchange-law-breaches-under-investigation/#comment-554285

>Government and rest of Institutions should generate very many confidence, work hard.

Sadly only minister left now in current Red Green government who does do a competent job is Katrín Júlíusdóttir.

The rest are either crazies who still think its 1978 ( all the Left Greens and Össur Skarphéðinsson ), or just interested in their future EU Commishionerships salaries and expensese to abuse ( rest of Social Democrats ).

Yes they are main problem now. Compeltely out of touch with what is needed and what Icelanders want they government to do. Which in current years is the right things.

Icelanders do want them to get out of the way of them starting new businesses.

“what do you think will happen to the Krona if all currency controls are lifted, as many politicians in Iceland are calling for”

I am not a fortune teller!

In the short term: speculators would get substantial profits and, saving workers would get terrible results. Icelandic authorities would have to carry out the pending reforms.. finalize initiated tasks.

“Will it fall and then bounce back, or simply crash and burn ?”

Now, in 2011, it would crash! Insufficient reserve currency would be run out quickly. Inflation would raise too much (18-20% again), raise interest rates (15%-18%), … and all the macroeconomic data would be destabilized: effort and sacrifice of three years.

Icelanders should save, reconstruct, adjust balances, grow and pay: Investors and speculators look for credible and substantial data, good results. Government and rest of Institutions should generate very many confidence, work hard. Firm hand! Perhaps, later.. (2013.4.5-2018) the Icelanders could follow with own currency (currency controls lifted).

I think that Iceland will not join the EU and, therefore, the króna will be the currency of the Icelanders. Perhaps a new Króna!

It is a very complicated labyrinth: in the small countries, bad things can get to be too bad!

I forecast a good future: of course better than Greece and Portugal!!

Will it fall and then bounce back, or simply crash and burn ?

CENTRAL BANK OF ICELAND; Results of foreign currency auction:

On 2 August 2011, the Central Bank of Iceland offered to purchase 72 million euros against payment in Treasury bonds. The resulting auction, which took place between 10:00 and 11:00 hrs. today, is an element in the removal of restrictions on movement of capital as set forth in the Central Bank’s capital account liberalisation strategy, published on 25 March 2011.

Offers were submitted for a total of 3,400,000.00 euros, and all offers were accepted in full. The auction was structured with a single-price format, so that all accepted offers were made available to primary dealers at the same price, which was set at 210.00 kr. per euro. Purchasers receive indexed Treasury bonds as payment for the foreign currency. Thus a total nominal amount of 711,874,251.00 kr. was sold in the indexed Treasury series RIKS 30 0701.

3,4mil : 72mil = ONLY 4,72% = IT WAS A DISASTER

http://www.sedlabanki.is/?PageID=287&NewsID=2915

Somehow Fisy, i have a really hard time believing anything that comes from the Chaimber of Commerce, based on what i know about that lot.

Maybe Freddy Miskin pulled this report out of his a******.

Back in April 2011 we did get an update on actual reality of what is going on with the ISK :

+http://www.vi.is/files/2011.04.15%20Iceland%20Chamber%20of%20Commerce%20-%20Status%20Report_1820127738.pdf

The Icelandic Economic Situation Status Report does do good job putting all facts into one convenient place. Editor Björn Thor Arnarson has done good job.

On p. 22 it does show graph of ” onshore ” vs ” offshore ” Krona rates.

p. 50 : ” On October 19th 2010 the Governor of the Central bank said that the exchange rate stabilized in the second half of 2009 with no supporting intervention since early November 2009. In 2010 the exchange rate has appreciated by 13% in trade-weighted terms, again without any supporting intervention. ”

So, no IMF money or other money has been spent on supporting Krona since then. Its been actual market based trades of people wanting to buy Krona and sell us EUR USD GBP etc.

Also On p. 49 it does remind of the bilateral swap with China 3.5billion CNY/66billion ISK three years maturity and extended if both agree.

Also see :
++http://www.icenews.is/index.php/2011/03/27/icelandic-krona-exchange-rates-reflect-recovery-of-national-economy/ which does talk a bit about IceSave III.
+++http://www.icenews.is/index.php/2011/05/17/iceland-receives-mixed-news-from-credit-ratings-agencies/