Minister of Commerce: Indexation Should Be Abolished Skip to content

Minister of Commerce: Indexation Should Be Abolished

Minister of Commerce Björgvin G. Sigurdsson agrees with CEO of Kaupthing Hreidar Már Sigurdsson that indexation should be abolished in the future.

“The indexation is somehow the accompaniment of the króna as a microscopic currency in a financial world without borders,” Björgvin G. Sigurdsson told Morgunbladid. “Until now, lending institutions have not been prepared to borrow long-term in our currency unless the loans are indexed.”

Sigurdsson pointed out that such an arrangement, which means that loans grow with the inflation, is unheard of in countries that have adopted the euro. The minister believes Iceland should therefore join the EU and adopt the euro as their currency.

But EU membership is not on the government’s current agenda. “We have to do our best to survive within our financial reality, which is the Icelandic króna,” Sigurdsson said.

“The question remains whether we can establish un-indexed loans with low interest rates in Iceland with our small currency,” the minister said. “I agree with Kaupthing’s CEO that there are only two ways we can go from here—reach total balance in the Icelandic economy or adopt the euro.”

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