Iceland: Ex Post Evaluation of Exceptional Access Under the 2008 Stand-by Arrangement

International Monetary Fund

No 2012/091, IMF Staff Country Reports from International Monetary Fund

Abstract: The ex-post evaluation of Iceland’s Exceptional Access under the 2008 Stand-By Arrangement is presented. In the wake of the global financial crisis in late 2008, Iceland has experienced a deep financial and economic crisis of its own. Domestically, the rapid increase in lending fuelled bubbles in all asset classes, particularly the stock market and real estate. Inflated asset prices and nontransparent cross-financing and related party lending between banks and holding companies helped mask poor asset quality and facilitated the financing of credit expansion by borrowing abroad, increasing vulnerability.

Keywords: ISCR; CR; banking system; debt restructuring; capital control; monetary policy; central bank; banks business diversification; bank support; bank collapse; control liberalization; overhang problem; restructuring cost; bad-bank approach; bank Support; Capital controls; Commercial banks; Global; capital control liberalization; program projection; exchange rate development; post evaluation; policy option; government of Iceland; Private debt (search for similar items in EconPapers)
Pages: 33
Date: 2012-04-12
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