Iceland financial crisis can be called a major continuing economic crisis that has gripped the country. With the collapse of all the three banking majors, troubles in refinancing the short-term debt and run-on deposits in United Kingdom, Iceland stands on the brink of complete meltdown. Though the situation is not so under control in different parts of the globe, Iceland is facing a very grim situation and there the condition has totally gone haywire.

No doubt, whenever there is a financial meltdown, the economy of the country faces most of the retreat. Likewise, this situation has had grave consequences to the economy of the country; national currency has touched its all time low, foreign currency transaction virtually suspended, and Iceland's stock exchange market capitalization plunges down more than ninety percent. This was not enough because a grimmer situation was about to follow, severe economic recession.

In September (read late September), government announced the nationalization of the Glitner Bank. Following week saw handing over of the control of Glitnir and Landsbanki to the receivers, appointed by FME or Financial Supervisory authority. Soon after, the largest bank of Iceland, kaupthing, was placed in to the receivership as well. However, this didn't help as the end of second quarter saw an external debt of around 50 billion Euros, more than eighty percent that was held by the banking sector. Besides, the country's GDP would even not dare come near to this debt as it only 8.5 billion dollars.

The overall or the total cost of the Iceland financial crisis is yet to be determined but it has been speculated that it already exceeds thirty percent of Iceland's GDP. More so, the heat is not only felt by the people staying in Iceland but to more than half-a-million depositors, number which is far greater than the entire population of the country. Their banks accounts have been frozen amidst a diplomatic deposit insurance argument.

To bail out Iceland from this serious situation-

> International Monetary Fund or the IMF has granted $2.1 billion to save the North Atlantic nation.

> European nation have even pledged to support and rebuild the shattered and devastated Iceland's financial system.

With European Nations pitching in for the support of Iceland, the total sum of money would be almost $10 billion. Though it would not enough for the capsizing boat, it would surely be the life-jacket for the country's economic turmoil.

No doubt, these monetary help would reduce Iceland Financial Crisis up to certain extent, but the threat still looms large and the question yet to be answered. What next?
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iceland    country    debt    percent    support    meltdown    monetary    currency

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