No full-text available
To read the full-text of this research,
you can request a copy directly from the author.
Iceland's capital controls and the constraints imposed by the EEA agreement
... Por su parte, los inversores no residentes con activos nominados en coronas no pueden deshacer sus posiciones y repatriar los beneficios obtenidos, sino que deben mantener el capital que tenían en Islandia dentro del país, ya sea en forma de depósitos o reinvertidos en nuevos activos en moneda local. 7 La regulación sobre los flujos de capitales se ha retocado en numerosas ocasiones a fin de cerrar algunas vías que los inversores utilizaban para evadir las restricciones (Viterbo, 2011). ...
... 7 El control de capital ha generado un mercado offshore de coronas islandesas, en el que los inversores con activos en coronas deshacen sus posiciones vendiendo los títulos a cambio de divisas a un tipo de cambio que se mueve en torno a las 240 ISK/EUR, lo que supone una depreciación adicional del 30% respecto al cambio oficial. Para un minuciosos análisis desde el punto de vista legal de cómo ha ido evolucionando el marco de los controles de capitales y en qué medida puede contravenir la legislación del Espacio Económico Europeo, véase Viterbo (2011). 8 Una concisa explicación de la estrategia de liberalización puede encontrarse en FMI (2011:14). ...
The banking system in Iceland was on the verge of total collapse in 2008 and that was the starting point of a huge economic crisis. Since then, public debt has increased remarkably due to both the partial rescue of banks and the financing of the public deficit that the crisis has produced. However, as time
went on, the cost of the public debt has become increasingly lower for the Government.
This paper argues that one of the most important factors to explain this phenomenon is Government intervention in financial markets, through the establishment of strong capital outflows regulation and the partial nationalization of the banking sector
... The first review by the IMF was set at the end of October 2009, and if everything would go according to plan, Iceland would receive an additional funding of US$167.5 million (IMF, 2009). At any event, the funding was delayed for several months for various reasons, amongst which one was the attainment of a deal with Great Britain and the Netherlands, who demanded a compensation of an amount as high as the Iceland's GDP for their citizens (Viterbo, 2011). ...
The purpose of this thesis is to conduct a comparative study in order to estimate the impact of the financial crisis to the GNI of Greece and Iceland. By applying synthetic control matching (a relatively new methodology) the study intends to compare the two countries, thus deducting conclusions about good or bad measures adopted. The results indicate that in both cases the adopted measures were not the optimal ones, since the synthetic counterfactual appear to perform better than the actual Greece and Iceland. Moreover, it is shown that Iceland reacted better to the shock it was exposed. However, different characteristics of the two countries impede the application of Icelandic actions in the Greek case.
In recent decades, South East Asia has become one of the world's most popular destinations for foreign investment. The member states of the Association of Southeast Asian Nations (ASEAN) have employed varying modalities to pursue first security and then economic cooperation. This book explores regional law and governance in ASEAN through the lens of its regulation of foreign investment. It adopts a new framework to identify the unique ontological autonomy of the ASEAN Investment Regime beyond a simple aggregation of its individual member states. It deploys a sociology-led approach (especially constructivism) and emphasizes ideational factors (such as culture and norms) that guide state actions from within. The book explores the manner in which ASEAN's history and culture have fundamentally shaped its foreign investment policies, leading to outcomes that often depart fundamentally from the external structure and script of Global Investment Law.
The first two decades of the twenty-first century witnessed a series of large-scale sovereign defaults and debt restructurings, in which sovereigns struggled to negotiate with recalcitrant bondholders, particularly hedge funds. Also, the outbreak of the COVID-19 pandemic in 2020 heralded a bleak financial outlook for many developing and emerging market countries, requiring sovereign debt restructuring in times of great macroeconomic uncertainty. Given the absence of a multilateral mechanism for sovereign debt restructuring equivalent to domestic corporate bankruptcy system, however, defaulted sovereigns often suffer from holdout litigation wrought by bondholders. This book proposes ways in which such legal actions could be regulated without the undue expense of bondholders' remedies by exploring the mechanism of balancing bondholder protection and respect for sovereign debt restructuring at various stages of litigation and arbitration proceedings.
Empirical studies confirm that the impact of capital account regulation (CAR) is highly case-specific, which underlines the need to identify the determinants of CAR effectiveness in greater depth. Coming from a political economy perspective, this article aims to contribute to this subject by comparing three experiences of intense regulation: Brazil (2008-2013), Peru (2008-2013), and Iceland (2008-2017). The main result encountered is that the bargaining power of the different sectors involved in regulation represents a crucial factor in explaining the impact of this policy. Furthermore, domestic banks play an important role in the effectiveness of capital account regulation.
Neben den USA bezahlten auch viele europäische Staaten die Stabilisierung ihrer Volkswirtschaften in der Finanzkrise mit einem deutlichen Anstieg der Staatsverschuldung. Um dem Teufelskreis steigender Schulden und Zinszahlungen zu entgehen, sehen sich die betroffenen Regierungen zum Schuldenabbau verpflichtet – und damit mit der Frage konfrontiert, wer die Lasten der Krise tragen soll. Da die von den Finanzmärkten verlangten Einsparungen bei den betroffenen Bevölkerungsteilen auf Ablehnung stoßen, sehen sie sich darüber hinaus dem Dilemma ausgesetzt, gleichzeitig die Märkte und das eigene Volk besänftigen zu müssen. Im Zentrum des Papiers stehen die Fragen, mit welchen Konsolidierungsmaßnahmen Regierungen auf diese Lage reagieren, wer die Lasten der Krise tragen muss und wie mögliche Unterschiede zwischen Staaten zu erklären sind. Untersucht werden diese Fragen anhand der Schuldenbekämpfung in Island und Großbritannien – zweier Länder, die besonders hart von der Finanzkrise getroffen wurden. Da sich in beiden Ländern Regierungen mit unterschiedlicher ideologischer Ausrichtung mit der beschriebenen Aufgabe konfrontiert sahen, nämlich eine Koalition aus Sozialdemokraten und Sozialisten in Island und eine von den Konservativen geführte Koalitionsregierung in Großbritannien, liegt ein besonderes Augenmerk auf der Frage, inwieweit derartige ideologische Differenzen einen Einfluss auf die Art der Konsolidierung und die Lastenverteilung haben.
The chapter focuses on recent developments in the legislation and case-law in the field of financial services law. Section 2 provides an overview of selected acts of EEA financial services legislation and recent reform proposals thereto. Section 3 analyses three landmark decisions of the EFTA Court that addressed the legal consequences of the world financial crises. The last section then investigates the practice of ESA in the financial services sector.
Due to the expensive stabilization of their national economies in the course of the financial crisis, many European countries witnessed a significant deterioration of their public finances. To break the vicious circle of rising debt and rising risk premiums, governments feel obliged to reduce debt and are thereby confronted with the question, who should shoulder the burden of fiscal consolidation. As the most prominent consolidation measures, welfare cuts and tax increases, are generally highly unpopular with the electorate, governments face the difficult task of calming the markets without alienating the voters at the same time. From this, the following questions arise: Which consolidation measures are chosen in this situation, who bears the burden of fiscal consolidation and what can explain differing paths to consolidation. Empirically, these questions are analyzed by a comparison of fiscal consolidation policies in Iceland and the United Kingdom, two countries that were hit extremely hard by the recent financial crisis. Since the governments confronted with exploding public debt – a left-wing coalition of social democrats and democratic socialists in Iceland and a Tory-led bourgeois coalition in Great Britain – differed considerably between both countries, the article focuses especially on the influence of ideological differences on the composition of consolidation packages and the resulting burden-sharing.
For decades past the IMF has been a byword for economic orthodoxy, which included disapproval of policy limits on cross-border capital flows. But in 2012 it announced a new “institutional view” giving more scope for capital flow management and in effect restricting the rights of capital owners. The Fund's program in Iceland after the October 2008 crash helped to pave the way; it was the first time the Fund had endorsed capital controls in a developed country. The essay describes Iceland's boom and bust, and how the government and IMF tried to manage the crisis. With IMF support, the government implemented capital outflow controls, initially as an emergency response and then as a longer-term stabilization measure. The control regime evolved in a complicated “game”, sometimes referred to in public debate as “the battle of Iceland”, between the central bank implementing a professionally-led capital account liberalization strategy versus political parties seeking to turn the controls to their advantage. From this political economy perspective we explain why the “temporary” capital controls remain in place more than five years on. At the end we draw some broad lessons from the Iceland case for the financial booms and busts to come.
This article analyzes the capital account regulation (CAR) applied in Iceland after the banking crash of October 2008, focusing on the determinants behind the implementation of this policy tool, its effects on economic performance, and its possible costs for the Icelandic economy. The previous literature on the topic is useful for these purposes but it does not provide an adequate framework for analyzing the Icelandic experience because Iceland is a very particular case within the group of countries that have historically resorted to CAR. Our main conclusions are that capital account regulation has been essential in stabilizing the currency after the banking crash, providing space for expansionary monetary policy, and keeping public debt yields low. Even though great uncertainty still surrounds the long-term prospects of the Icelandic economy, CAR implementation has been a step toward a promising future economic scenario.
Iceland, Ireland and Latvia experienced similar developments before the crisis, such as sharp increases in banks' balance sheets and the expansion of the construction sector. However the impact of the crisis was different: Latvia was hit harder than any other country in the world. Ireland also suffered heavily, while Iceland came out from the crisis with the smallest fall in employment, despite the greatest shock to the financial system. There were marked differences in policy mix: currency collapse in Iceland but not in Latvia, letting banks fail in Iceland but not in Ireland, and the introduction of strict capital controls only in Iceland. The speed of fiscal consolidation was fastest in Latvia and slowest in Ireland. Economic recovery has started in all three countries and there are several encouraging signals. The programme targets in terms of fiscal adjustment, structural reforms and financial reform are on track in all three countries. Iceland seems to have the right policy mix. Internal devaluation in Ireland and Latvia through wage cuts did not work, because privatesector wages hardly changed. The productivity increase was significant in Ireland and moderate in Latvia, yet was the result of a greater fall in employment than the fall in output, with harmful social consequences. The experience with the collapse of the gigantic Icelandic banking system suggests that letting banks fail when they had a faulty business model is the right choice. There is a strong case for a European banking federation.
ResearchGate has not been able to resolve any references for this publication.