The capital controls that have been sustaining the value of the krona since the economic collapse last October will begin to be lifted gradually in November, the Central Bank announced yesterday.
The krona would near self-destruct if all the controls were lifted simultaneously on account of “impatient investors” looking to withdraw their funds from Iceland. Such investors are estimated to have US$ 5 billion being held in the country.
The governor of the Central Bank, Svein Harald Oygard, believes that strategically lifting the controls and monitoring the outflow of capital from the Icelandic economy should be simple enough on account of the small size of the nation. He is also hopeful that the controls can be lifted without significantly depreciating the krona any further.
It is not known how long the process will take, as each new stage will only commence once the economy has stabilized itself following the execution of the preceding stage. The plan has already been approved by parliament.
A ten-page document outlining the phased plan has been prepared by the Central Bank and and the Ministry of Business Affairs and can be read by visiting the Central Bank’s website.