“The crossroads we are standing at concern the fact that we now need to change stability into investment, growth and employment. Most indications are that growth began again in the last part of last year. It was, on the other hand, not particularly vigorous and investment remains at a historic low,” Central Bank of Iceland governor, Mar Gudmundsson said in a speech today in Akureyri.
Gudmundsson began his speech by saying how good it was to be at the University of Akureyri, in Iceland’s second city. Such economic progress speeches have only ever been given in Reykjavik before; and as the Central Bank serves all of Iceland, it was especially pleasing to be in Akureyri, Gudmundsson said.
The Central Bank governor said that unemployment is still much higher than Icelanders are used to and involves significant unused capacity in the economy. In this regard, there are indications that the currency exchange controls which have helped stabilise the economy are now hindering investment and foreign trade opportunities and are increasingly working to slow economic growth.
“In any case, Icelanders are contractually bound by the EEA to stop the currency controls when the emergency that called for them is over,” Gudmundsson said. “It is therefore fortunate that the conditions needed to relieve the controls have improved in recent months. In the first case we can see that national economic stability has improved, as I discussed above. In the second instance, income to the state treasury has increased and debt demands upon it are going down and if it continues in this manner there is no need to fear any unsustainable debt burden upon it. Next, currency reserves have increased massively and fears over the state’s foreign debt position have reduced significantly. The principle thing needed now is for the situation of the banking system to be strong enough to finance itself outside of the currency controls. It is hoped that such a bill of health can be given in the coming months. It should be reiterated in this connection that, according to statements that appeared in November, and the material made public following a fourth review of the program with the IMF, a new plan for the abolition of capital controls is being worked on and is scheduled to be revealed at the end of February. Similarly it has been stated that nothing will be done in connection to removing capital controls until the plan has been made public; except the possible preparation of swap deals between offshore kronur held by foreign parties and foreign currency held by domestic parties and that overseas kronur could be repatriated in the form of investment in the economy, under certain conditions,” Gudmundsson said.
There is only one direction at the crossroads for you Mr. Central bank chief and your very corrupt country.
Not forward,left,right or reverse, but down south
into a very big black hole!
In case you and your finance minister did not know,
Bond holders are the biggest investors.
Bond holders carried your country for many years and look how you have treated us in time of crisis?
Do you really think anyone or any institution will ever invest in Icelandic bonds for the few generations?
Welcome the next Zimbabwe of Europe :-)
Mr. Central bank chief,
I guarantee you with all the finances that I have left over after Iceland stole my investments, that no one in this world will ever invest in Iceland, unless if you have not read a newspaper in the last three years.
Do you really want foreigners like myself to buy bonds again?
Your finance minister introduced post emergency laws not to pay any bond holder? Bonds holders carried Iceland financialy for many years.
Instead of being thankfull, you chose to exclude the bond holders from being paid, yet the three banks are functioning again.
Guess what? the news about what Iceland did to the Bond holders is spreading all over the world. People like me are informing everyone about the corruption in Iceland.
Ridiculous!
Iceland is doomed economicaly for the next 50 years unless it pays all money owed to the bond holders of failed banks Landsbank and Kaupthing.
How can a government introduce or change laws post the bank crash preventing payment of money to creditors of bonds only? especially if these banks are now profitable?