Iceland: Ex Post Evaluation of Exceptional Access Under the 2008 Stand-by Arrangement
IMF Staff Country Reports, April 12, 2012
Source details
- Canonical URL
- Iceland: Ex Post Evaluation of Exceptional Access Under the 2008 Stand-by Arrangement
Other formats
Bibliographic details
- Published: April 12, 2012
- Series: IMF Staff Country Reports
Overview
- 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 experienced a deep financial and economic crisis.
- 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.
- These practices facilitated the financing of credit expansion by borrowing abroad, increasing vulnerability.
Key findings and analytical points
- Rapid credit growth contributed to asset price bubbles in the stock market and real estate.
- Nontransparent cross-financing and related party lending obscured poor asset quality within banks and holding companies.
- Reliance on foreign borrowing to finance credit expansion heightened external vulnerability.
- The document presents an ex-post evaluation of the exceptional access provided under the 2008 Stand-By Arrangement in this context.
Subjects and keywords
- Subjects:
- Balance of payments
- Banking
- Capital controls
- Commercial banks
- External debt
- Financial crises
- Financial institutions
- National accounts
- Private debt
- Public debt
- Keywords:
- bad-bank approach
- bank collapse
- bank support
- bank Support
- banking system
- banks business diversification
- capital control
- capital control liberalization
- Capital controls
- central bank
- Commercial banks
- control liberalization
- CR
- debt restructuring
- exchange rate development
- Global
- government of Iceland
- ISCR
- monetary policy
- overhang problem
- policy option
- post evaluation
- Private debt
- program projection
- restructuring cost
Content in this bundle
- Executive Summary — _cr1291