End Of Capital Controls: Changes Little For People, Changes Much For Business

Headlines made around the world that Iceland has lifted the last of its capital controls does not actually change very much for the average Icelander.

First, this latest agreement means the final step has been taken in lifting these controls; most of the existing capital controls put in place in the wake of the 2008 financial crash have already been lifted.

Rather, this latest removal of capital controls instead means that capital can move to and from Iceland, and domestic parties can invest overseas, without restrictions.

The matter doesn’t end there, either, as now the government plans to completely review their monetary policy. For this task, Prime Minister Bjarni Benediktsson has appointed a three-person committee.

This committee is comprised of Ásdís Kristjánsdóttir, an economist and the director of Business Iceland; Ásgeir Jónsson, the president of the economics department at the University of Iceland, an economic advisor for the securities exchange company Virðingar hf. and the former director of the analysis department at Kaupþing, a bank which was taken over by the government in the wake of the 2008 crash; and Illugi Gunnarsson, an Independence Party MP and a former Minister of Education who, as Stundin points out, announced his departure from politics last summer after extensive coverage of a conflict of interest scandal regarding his involvement with Orka Energy.

As such, this latest removal of capital controls will make little difference for the average Icelander, and what Iceland’s new monetary policy will be in the wake of this move still remains to be seen.