Iceland's remaining capital controls should be ended by the end of the year, a top finance official said, dovetailing with a potentially radical overhaul of monetary policy that may include a peg. The country's recovery from its crippling 2008 banking crisis was confirmed this year when it relaxed most of the restrictions that had been preventing its population, businesses and investors from moving money abroad. But the government kept a small restriction in place as a precaution, mainly affecting US investment funds.
Having seen its currency soar and coaxed some of the funds with cash-for-bonds swaps, the final controls are not seen lasting long. "The remainder (of the money restricted by the capital controls) is something we have to deal with," Gudrun Thorleifsdottir, director general of Iceland's ministry of finance and economic affairs, told Reuters.
"It will be necessary to alter the law to release, so to speak, the rest. But most likely the government will announce something about this later this year." Around $2 billion of foreign money had been frozen as result of the capital controls, most of which belonged to four US-based funds - Autonomy Capital, Eaton Vance, Loomis Sayles and Discovery Capital Management.
At least two of those funds, Autonomy and Eaton Vance, have just taken up a cash-for-bonds swap offer from the central bank, and others have until mid-June to accept the same deal. The offer is at a crown-to-euro exchange rate that is well below the current open market rate and Loomis Sayles has said that it at least won't sign up until it gets the live rate.
Comments
Comments are closed.