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Iceland to end capital controls after 8 years

Monday, March 13, 2017 - 01:31

Iceland's finance ministry says it is about to lift the capital controls that have been in place since the financial crisis in 2008, easing restrictions on households and businesses. Sonia Legg reports.

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Iceland's been under a cloud for almost a decade - and it has nothing to do with its 130 volcanos. Capital controls have been restricting businesses, individuals and pension funds. The collapse of its three main banks after the 2008 financial crash the main cause. (SOUNDBITE) (English) COMMERZBANK, GLOBAL FINANCIAL ECONOMIST, PETER DIXON, SAYING: "The problem was Iceland had a huge financial sector relative to the size of its economy and its capital flows dried up and clearly the banking sector got hugely squeezed." The government started dismantling controls last year by easing restrictions for local residents. (SOUNDBITE) (Icelandic) ICELANDIC PRIME MINISTER, BJARNI BENEDIKTSSON, SAYING: "The controls were a necessary part of reconstructing the economy after the crash. There was an obligation to repatriate foreign currency and great restrictions were placed on capital movements." The Central Bank has had to agree to buy more than $800 million worth of frozen offshore crown assets. But the lifting of controls is considered a milestone. (SOUNDBITE) (English) COMMERZBANK, GLOBAL FINANCIAL ECONOMIST, PETER DIXON, SAYING: "Their total removal is of course an indication that the authorities feel that the economy is back on an even keel and that many of the international problems that Iceland suffered from are no longer in place so in that sense it is very good news for Iceland and probably a good indicator of what is happening across the rest of the world." A tourism boom has helped - Iceland's economy grew by 7.2 percent last year. Around 1.8 million people visited the country - 40 percent more than in 2015.

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Iceland to end capital controls after 8 years

Monday, March 13, 2017 - 01:31