Iceland Set To Remove Capital Controls

Prime Minister Bjarni Benediktsson and Minister of Finance Benedikt Jóhannesson making today's announcement

The Icelandic government on Sunday announced that it would lift nearly all of the remaining capital controls, allowing Icelanders, corporations and pension funds full access to the global capital markets, effective tomorrow.

Iceland has been lifting capital controls over the past year at an "incremental" rate, that will see the final measures removed later this week. Reykjavik broke off negotiations on European Union membership, nationalized three major banks and defaulted on $85 billion in loans.

The centre-right government in the island nation of 332,000 people has promised to allow the free movement of capital, while guaranteeing the stability of the economy. Unemployment is down at around 3% and the government said inflation is at sustainable levels.

Iceland said on Sunday capital controls, such as those which restrict money flowing in and out of the country, would be lifted from Tuesday.

Benedikt Jóhannesson, minister of finance and economic affairs, said: "Iceland's careful, measured approach to lift capital controls was developed and approved with domestic and worldwide support".

He added: "As a result of this structured plan, our diversified economy is larger than ever before and expected to continue to grow at a robust pace this year".

Past year around 1.8 million people visited Iceland, a 40% rise on 2015. A lot of them came from the United States, followed by the UK.

"Iceland's careful, measured approach to lift capital controls was developed and approved with domestic and worldwide support", said Benedikt Johannesson, Iceland's minister of finance and economic affairs.

That tourism boom, coupled with strong investment by business and in the housing market, helped the economy grow 7.2% in 2016.

The government also announced that the Central Bank of Iceland bought about 90 billion kronor ($834 million) at 137.5 krona per euro from remaining offshore holders of the currency, in "a move which will safeguard the economy against monetary, exchange rate, and financial instability".

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