Prime minister Sigmundur Davíð Gunnlaugsson has announced that plans to lift capital controls will be introduced before the parliament's summer recess. Capital controls have been in place in Iceland since the domestic banking system collapsed in 2008.
The PM’s announcement was delivered at the Progressive Party’s (Framsóknarflokkurinn) annual conference that took place last weekend. The announcement came as a surprise as there are only 20 working days until the parliament's summer recess starts so the coalition government has cut it self a tight schedule to get the plans through.
Plans for lifting capital controls have been supervised by financial minister Bjarni Benediktsson, the chairman of the other coalition party, the Independence Party (Sjálfstæðisflokkurinn).
The PM seems to have bypassed the financial minister by making the announcement, which political analysts in Iceland interpret as a sign of struggle between the two parties. Financial minister Bjarni has not made a comment.
Opposition leaders in the parliament have complained about lack of information regarding the plans.
According to PM Sigmundur Davíð a central part of the strategy is to implement a hefty exit task on foreign-exchange transactions to limit capital flight and prevent a plunge in the local currency, the Icelandic króna (ISK). That strategy has been discussed for several years now.
Read more: Estates of the three failed banks could face 35% exit tax
A prominent parliamentarian of the Independence Party, Vilhjálmur Bjarnason, dismissed today (link in Icelandic) these plans claiming that they will bring prolonged litigation on behalf of creditors making it impossible to lift the capital controls.
As only 6% of the creditors are Icelandic identities, the exit tax would principally be directed at foreign creditors of the three big bank estates, Glitnir, Kaupthing and Landsbankinn (LBI), all still in winding-up proceedings. Combined assets of the three estates are ISK 2,600 billion (USD 18.65 billion).
The exit tax would also be used to target the huge amount of offshore ISK that threaten the stability of Iceland’s small currency.
Prime minister Sigmundur Davíð Gunnlaugsson has announced that plans to lift capital controls will be introduced before the parliament's summer recess. Capital controls have been in place in Iceland since the domestic banking system collapsed in 2008.
The PM’s announcement was delivered at the Progressive Party’s (Framsóknarflokkurinn) annual conference that took place last weekend. The announcement came as a surprise as there are only 20 working days until the parliament's summer recess starts so the coalition government has cut it self a tight schedule to get the plans through.
Plans for lifting capital controls have been supervised by financial minister Bjarni Benediktsson, the chairman of the other coalition party, the Independence Party (Sjálfstæðisflokkurinn).
The PM seems to have bypassed the financial minister by making the announcement, which political analysts in Iceland interpret as a sign of struggle between the two parties. Financial minister Bjarni has not made a comment.
Opposition leaders in the parliament have complained about lack of information regarding the plans.
According to PM Sigmundur Davíð a central part of the strategy is to implement a hefty exit task on foreign-exchange transactions to limit capital flight and prevent a plunge in the local currency, the Icelandic króna (ISK). That strategy has been discussed for several years now.
Read more: Estates of the three failed banks could face 35% exit tax
A prominent parliamentarian of the Independence Party, Vilhjálmur Bjarnason, dismissed today (link in Icelandic) these plans claiming that they will bring prolonged litigation on behalf of creditors making it impossible to lift the capital controls.
As only 6% of the creditors are Icelandic identities, the exit tax would principally be directed at foreign creditors of the three big bank estates, Glitnir, Kaupthing and Landsbankinn (LBI), all still in winding-up proceedings. Combined assets of the three estates are ISK 2,600 billion (USD 18.65 billion).
The exit tax would also be used to target the huge amount of offshore ISK that threaten the stability of Iceland’s small currency.
