In yet another victory for not bowing to the great-and-good of modern orthodoxy, Iceland has won a court ruling that enables it to repay billions of Euros (in failed bank deposits to the UK and Holland) on its own terms. Icesave collapsed in 2008 and left thousands of depositors, who had chased higher yielding deposits, with losses. The Dutch and British governments demanded prompt payment; Iceland denied, preferring (rationally) to repay what they could from the then-bankrupt entity.
While on the one hand, Iceland's decision to inch towards lifting its capital controls is a positive step, it appears what they give with one hand they are taking with another. Just as we predicted three years ago, the muddle-through has failed and there are only hard choices left and sure enough BCG's envisioned 'wealth tax' appears to be rearing its ugly head once more.
Iceland in an economic recovery thanks to its decision to not bailout banks at taxpayer expense during the great financial collapse. Iceland's decision upset depositors from the UK and Netherlands, who decided to reimburse depositors, then sue Iceland to pay.
Iceland is within days of reaching a deal with Britain and the Netherlands on repaying the more than $5 billion paid to Landsbanki Icesave accounts holders after the bank collapsed, according to a report late on Saturday.