Iceland is an example of how a country with the totally broken economy can see the light at the end of the tunnel.
Although in Argentina We are accustomed to listening to stories from our country and national border Extremely challenging economic crisis And devastating, these events occur worldwide and are not limited to this side of the puddle.
Iceland, a Nordic island country characteristic by its cold and long winters and its landscapes worthy of a fairy talehe was also victim of bad management and falls of the world economic system. However, the most striking of your case is The unusual method They used to resurface the ashes.
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2008 economic crisis
It all started years before, when the Icelandic banking system was completely privatized in the early 2000s. This led to a Quick and uncontrolled expansion of the financial sector. Icelandic banks began to capture huge amounts of foreign capital and aggressively invest in international markets, multiplying its assets disproportionately in relation to the size of the local economy.
When the global financial crisis in 2008the most important Icelandic banks, being Glitnir, Landsbanki and Kaupthing, found themselves in an unsustainable situation. Not being able to refinance their external debts, they collapsed one after another. The size of the banking sector was about 10 times the GDP of Iceland, which led the country to the edge of bankruptcy.
The Icelandic Crown (ISK) more than 50% was devalued In front of the euro, what fired inflation and more expensive basic products. Although the country had always had very low unemployment rates, unemployment increased drastically. In response, the government took urgent measures: the banks nationalized, the financial system declared in bankruptcy and requested a rescue from International Monetary Fund (IMF).
Iceland recovery
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Unlike other European countries, Iceland adopted unconventional measures to get out of the crisis. Instead of rescuing banks with public money, He let them breakwhich prevented the cost of falling completely on the population. To contain the currency escape, they established themselves Strict capital controls.
In addition, a debt restructuring process was implemented to relieve the situation of Icelandic families, especially in relation to Mortgages Unlike other countries, Iceland also carried out investigations and judicial processes against several bankers and politicians responsible for the crisis.
Source: Ambito
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