!! History Commons Alert, Exciting News

Follow Us!

We are planning some big changes! Please follow us to stay updated and be part of our community.

Twitter Facebook

Global Financial and Economic Crises

Global Economic Collapse in Iceland

Project: Global Financial and Economic Crisis 2007-Present
Open-Content project managed by KJF, mtuck

add event | references

The British financial website “This is Money” warns about the stability of the Kaupthing Edge banking product. Kaupthing Edge is a brand used to attract depositors by the Icelandic Kaupthing Bank. In response to a reader’s question about the brand’s soundness, correspondent Alan O’Sullivan points out that the rating agency Moody’s has recently described Icelandic banks as “fragile” and that its borrowing costs have increased 400% in the last year. For this reason, analysts think it is far more likely to default than any other European bank. As a result, O’Sullivan recommends that savers do not maintain balances on accounts with the bank in excess of the maximum limit on deposit insurance. [This is Money, 2/22/2008] Kaupthing Bank will collapse seven and a half months later. [Reuters, 10/9/2008]

Entity Tags: Kaupthing Edge, Alan O’Sullivan, This is Money, Kaupthing Bank

Category Tags: Commentaries on Economic Issues, Iceland

Mohammed bin Khalifa al-Thani, a member of the royal family of Qatar, pays $280.4 million for a 5% stake in the Icelandic Kaupthing Bank (see February 22, 2008). The bank’s shares have been falling on Iceland’s stock exchange, down 57% in the last twelve months, and the bank has been buying them back itself in an attempt to boost its stock price. The purchase makes al-Thani the third largest shareholder in the bank. [Forbes, 9/22/2008] Seventeen days later, the bank will be on the verge of collapse and will be seized by the government of Iceland. [Reuters, 10/9/2008]

Entity Tags: Kaupthing Bank, Mohammed bin Khalifa al-Thani

Category Tags: Western Purchases by Asians, Iceland

The government of Iceland takes a 75 percent stake in the country’s third-largest bank, Glitnir, after the bank runs into short-term funding problems. [BBC, 2/2/2009]

Entity Tags: Glitnir

Category Tags: Bailouts and Other Government Aid, Iceland

The government of Iceland offers an unlimited guarantee for all savers in local banks. In addition, Iceland’s parliament passes emergency legislation enabling the government to intervene extensively in Iceland’s financial system. [BBC, 2/2/2009]

Category Tags: Bailouts and Other Government Aid, Iceland

Trading in Iceland’s six biggest financial shares is suspended on the OMX Nordic Exchange Iceland. [BBC, 2/2/2009]

Entity Tags: OMX Nordic Exchange Iceland

Category Tags: Other, Iceland

The government of Iceland takes control of the country’s second and third largest banks, Landsbanki and Glitnir; it already had a majority in Glitnir (see September 29, 2008). The financial crisis hit Icelandic banks so severely because they owe relatively more money than banks in other countries. When the crisis starts in earnest, they owe around six times the country’s total gross domestic product. Therefore, when the world’s credit markets dry up, they are unable to refinance their loans. [BBC, 2/2/2009]

Entity Tags: Landsbanki, Glitnir

Category Tags: Bailouts and Other Government Aid, Iceland

Following the seizure of two Icelandic banks by that country’s government (see October 7, 2008), the British government invokes anti-terrorism legislation to seize Icelandic assets in Britain. Iceland’s Prime Minister Geir Haarde criticizes Britain, saying he is upset and shocked that it has used “hostile” anti-terrorism legislation to freeze Icelandic banks’ assets. However, British Prime Minister Gordon Brown condemns Iceland’s handling of the collapse of its banks and its failure to guarantee British savers’ deposits. He says Iceland’s policies are “effectively illegal” and “completely unacceptable.” Iceland will later threaten legal action against Britain. [BBC, 2/2/2009]

Entity Tags: Gordon Brown, Geir Haarde

Category Tags: Other, Britain, Iceland

Iceland’s government takes control of the country’s biggest bank, Kaupthing. This follows a decision by the British government to invoke anti-terrorism legislation to freeze Icelandic assets in Britain (see October 8, 2008). [BBC, 2/2/2009]

Entity Tags: Kaupthing Bank

Category Tags: Bailouts and Other Government Aid, Iceland

The Central Bank of Iceland cuts the country’s interest rate by 3.5 percent to 12 percent. Interest rates had previously been at a record high of 15.5 percent. [BBC, 2/2/2009]

Entity Tags: Central Bank of Iceland

Category Tags: Iceland

October 20, 2008: New Banks Formed in Iceland

Iceland’s financial authorities formally announce the establishment of new Glitnir, Landsbanki, and Kaupthing banks. The old banks were taken over by the government two weeks previously as their condition had deteriorated due to the global credit crisis (see October 7, 2008 and October 8, 2008). [BBC, 2/2/2009]

Entity Tags: Glitnir, Landsbanki, Kaupthing Bank

Category Tags: Other, Iceland

The Central Bank of Iceland raises its key interest rate to 18 percent from 12 percent due to problems in the country’s banking system. [BBC, 2/2/2009]

Entity Tags: Central Bank of Iceland

Category Tags: Other, Iceland

The International Monetary Fund (IMF) approves a $2.1 billion loan for Iceland, whose economy has been devastated by the global financial crisis. Iceland becomes the first Western European nation to get an IMF loan since Britain in 1976. [BBC, 2/2/2009]

Entity Tags: International Monetary Fund

Category Tags: Other, Iceland

The annual rate of inflation in Iceland rises to a record high of 17.1 percent. [BBC, 2/2/2009]

Category Tags: Other, Iceland

The International Monetary Fund (IMF) says Iceland, which has been devastated by the global financial crisis, has taken the first important steps towards restoring financial stability. It says the key objective of stabilizing Iceland’s currency, the krona, is being met. [BBC, 2/2/2009]

Entity Tags: International Monetary Fund

Category Tags: Other, Iceland

The Icelandic finance ministry says the country’s economy is forecast to shrink by 9.6 percent in 2009. In addition, it predicts no growth in 2010. [BBC, 2/2/2009]

Category Tags: Other, Iceland

Prime Minister of Iceland Geir Haarde calls a general election for the spring, two years early. The decision to have early elections is triggered by the global financial crisis, which has hit Iceland particularly badly. Haarde adds that he will not stand again because he has throat cancer. Two days previously, protesters angry at the economic crisis had surrounded his car, banging on its windows and pelting it with eggs. [BBC, 2/2/2009]

Entity Tags: Geir Haarde

Category Tags: Other, Iceland

Icelandic Prime Minister Geir Haarde announces the immediate resignation of the country’s government. The government became unstable when Iceland was hit particularly hard by the global financial crisis and the government had to take over three major banks. Haarde had already called an early election in Iceland (see January 23, 2009), but could have remained in office until voting. However, talks about continuing until the election with his coalition partner, the Social Democratic Alliance, break down and he leaves office. [BBC, 2/2/2009]

Entity Tags: Geir Haarde, Social Democratic Alliance

Category Tags: Other, Iceland

Following the resignation of the previous cabinet (see January 26, 2009), a new government is formed in Iceland by the Left-Green Movement and the Social Democratic Alliance. The new government will be in office for only a few months, until fresh elections in the spring. New Prime Minister Johanna Sigurdardottir sets out her government’s plan to deal with the financial crisis. She says her priority will be to replace the central bank’s board, which failed to prevent the collapse of the country’s banking system. She also says she will ask a parliamentary committee to look into joining the EU. [BBC, 2/2/2009]

Entity Tags: Social Democratic Alliance, Left-Green Movement, Johanna Sigurdardottir

Category Tags: Other, Iceland

Ordering 

Time period


Email Updates

Receive weekly email updates summarizing what contributors have added to the History Commons database

 
Donate

Developing and maintaining this site is very labor intensive. If you find it useful, please give us a hand and donate what you can.
Donate Now

Volunteer

If you would like to help us with this effort, please contact us. We need help with programming (Java, JDO, mysql, and xml), design, networking, and publicity. If you want to contribute information to this site, click the register link at the top of the page, and start contributing.
Contact Us

Creative Commons License Except where otherwise noted, the textual content of each timeline is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike