EU ‘ready to help Iceland ease capital controls’

The EU says it is ready to provide Iceland with help and technical guidance in lifting the capital controls currently in operation.

Olli Rehn, the European Union economic and monetary affairs commissioner (and former EU expansion commissioner), said yesterday in Brussels that the bloc is ready to offer Iceland technical support to bring its two-year long period of capital controls to an end.

“It’s very important that the government of Iceland is now preparing a strategy for lifting the capital controls and linking it to its European perspective,” Rehn told reporters following his meeting yesterday in Brussels with Arni Pall Arnason, the Icelandic minister of economic affairs. “We are ready to provide technical assistance for this work and these objectives,” Bloomberg reported.

Iceland has applied for membership of the European Union following the election of the pro-European Social Democrat party following the country’s worst financial crisis since independence. As previously reported on IceNews, part of the accession process includes the submission of a detailed economic report and forecast to the European Commission.

Bloomberg reports that the Central Bank of Iceland is readying itself to begin limiting the capital controls which have been shielding the fragile Icelandic krona from depreciation since the banking crash. Having prevented a mass exodus of currency, the capital controls have helped Iceland’s trade surplus to stabilise the economy. However, it is still not an easy task to lift the controls without undoing their good work. Capital controls are also acting as a barrier to trade and foreign investment; which is why they were only intended to be temporary.

“It’s no easy task to lift the capital controls and we need all advice and all help that we can get,” Arnason told media at his press conference with Olli Rehn. “It’s important for us to seek to ensure that the negative effects of lifting the capital controls are as little as possible.”

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