Legislation on Foreign-Denominated Loans Enacted Skip to content

Legislation on Foreign-Denominated Loans Enacted

Legislation regarding unlawfully foreign-denominated loans to Icelandic households has come into force following its enactment by parliament as announced by the Ministry of Economic Affairs yesterday.

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Copyright: Icelandic Photo Agency.

Financial institutions now have 90 days to convert foreign-denominated automobile loans in accordance with the interest rates published by the Central Bank of Iceland.

Furthermore, households with housing mortgages will have the option of converting the loans into inflation-linked loans or non-indexed loans.

The enactment of this legislation marks a significant step in the process of household debt restructuring, the ministry states.

The legislation is aimed at the efficient recalculation and reimbursement of unlawful foreign-denominated loans, despite the complicated and diverse nature of the loan contract arrangements.

The legislation is also necessary for the implementation of a recent agreement between the government, financial institutions and pension funds regarding debt-relief for over-indebted households.

The legislation facilitates household debt restructuring through substantial debt write-off, without threatening the stability of the financial system.

Click here to read more about the foreign-denominated loans and here to read more about the government’s dept relief plan.

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