30-Mar-2016: Liquidators' Update, see Deloitte site

An Icelandic Saga by Baron Munchhausen?

Thorolfur Matthiasson, Professor of Economics at the University of Iceland in Reykjavik, explains some of the issues Iceland faces due to the collapse of IceSave:

The Icelandic Landbanki and its internet branches in London and Amsterdam, IceSave, collapsed in October of 2008. An emergency law cooked up in haste secured the operation of the Icelandic branches. Icelandic deposits were moved from the fallen bank to a new bank along with some of the assets of the fallen banks necessary to cover the deposits. Hence, the crash caused no disruption for domestic deposit holders. That was not the fate of the IceSave depositors in England and the Netherlands. At stake were €1.7bn in the Netherlands and £4.5bn in England – enough to catch the attention of high ranking government officials. . .

This claim does not stand up to scrutiny when matched with the economic facts presented above. What is going on? Well, this is where Baron Munchhausen enters the story. The Icelandic people have been led to believe that they stand to pay the gross amount of the guarantee, that the debt owed to the Dutch and the UK is more than 50% of GDP and that it will take generations to pay back this debt. The opposition in the Parliament, parts of the supporters of the Icelandic Government in Althingi and private pressure groups possibly with political ties have put on the clothes of Baron Munchausen and exacerbated the situation.  Economists View website - 03-Mar-10.