The Ministry for Foreign Affairs, in consultancy with the Prime Minister’s Office, the Ministry of Finance, the Ministry of Business Affairs, the Central Bank of Iceland and the Icelandic Financial Supervisory Authority (FME), has sent a letter to the European Commission, commenting on the global economic collapse and proposing necessary actions to stem its consequences.
The European Central Bank in Frankfurt, Germany. Copyright: Icelandic Photo Agency.
“Iceland became one of the first and hardest-hit victims of the global financial crisis in the fall of 2008. The crisis now threatens the livelihood of millions around the world and calls into question the viability of the global financial system,” the letter states, continuing:
“The active leadership of the European Union in addressing these difficult challenges is of paramount importance and Iceland looks forward to contributing constructively to the important work ahead.”
Iceland supports the main proposals of the de Larosière report regarding the reorganization of the European financial regulation system but places special emphasis on the importance of the EEA/EFTA states, which are qualified members of the joint European financial market on the basis of the EEA agreement, being able to participate in the development of a new financial regulation system and join the planned European System Risk Council.
Iceland also stresses the importance of reorganizing deposit insurance for financial institutions and the necessity of strengthening countries’ ability to react, proposing a joint cross-border responsibility to prevent the collapse of single economies.
During the dispute on Iceland’s obligation to Icesave account holders last fall, Iceland and the EU member states disagreed to what extent the Icelandic state was obligated to cover the deposit insurances and in the end Iceland was barred from an agreement with the International Monetary Fund (IMF) until the Icesave dispute was settled.
Furthermore, Iceland encourages the establishment of a legal framework on the operations of financial rating companies, which ensures transparency, as well as international cooperation on information on hiding capital away in tax shelters.
Iceland’s comments were made following a declaration from the EU on March 4 where the European Commission requested proposals and standpoints from parties of interest from within and outside the union.
The European Commission will submit its final proposals on an action plan to an EU member state summit in June. These proposals will lead to the establishment of a number of new regulations that will affect Iceland directly through the EEA agreement, as the Foreign Ministry stated in a press release.
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