Loophole in Iceland exchange controls closed by secretive bill

The Icelandic parliament late last night changed the law on currency exchange restrictions to close a loophole which had been discovered. Lawmakers were careful to keep their intentions secret until after the markets closed yesterday afternoon.

The bill was approved with 25 votes against 12 and three MPs did not vote. 23 MPs were presumably therefore not present at the late night session.

Vísir.is reports that the initial bill presented was deemed by parliamentarians to be too harsh and changes were made to it after its second reading to allow cash deposits held in foreign currencies and owned by foreign investment firms or the Central Bank of Iceland to be exempt from the tightened regulations. Such deposits are defined at the level they stood at at end of day on 12th March.

Alþingi MPs were surprised to be called to unscheduled parliamentary party meetings to discuss the secret bill they had not been told about, as soon as the currency markets closed at 16.00.

It is assumed the goal of the act is to stem the ongoing recent decline in the value of the Icelandic króna. The closing of the loophole in the exchange controls comes at an interesting time, when officials have already begun the slow process of removing the restrictions altogether.

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