As policymakers continue to grapple with the problems facing the crisis-hit countries in the euro area and the clouded outlook for the global economy, attention has turned to Iceland, which three years ago saw its entire banking system crumble in just a few days.
Private creditors ended up shouldering most of the losses relating to the failed banks, and today Iceland is experiencing a moderate recovery. Unemployment is declining, and the government was able to return to the capital markets earlier this year.
“What was seen as a disaster for Iceland three years ago is increasingly being seen as good fortune with the passing of time. Icelanders may have lost their financial system but instead they were spared the burden of nationalizing private debt,” said Árni Páll Árnason, Minister of the Economy.
via IMF Survey: Iceland’s Unorthodox Policies Suggest Alternative Way Out of Crisis.