Potential banking crisis in Iceland exaggerated, Moody’s claims Skip to content

Potential banking crisis in Iceland exaggerated, Moody’s claims

In its annual credit analysis report, Moody’s Investors Service states that Iceland’s Aaa rating is supported by strong institutions, low government debt and the tested ability to withstand shocks to the economy. This is in sharp contrast to the views expressed by various credit and investment institutions earlier this year, in which Iceland’s economic outlook was considered bleak, at best. Excerpts from the report are published on the Central Bank of Iceland’s website today and are reported in several major media.

According to Moody’s Analyst Joan Feldbaum-Vidra, “Iceland is a wealthy, advanced industrialized country that is also in the midst of a major economic diversification initiative that is enhancing the wealth and development of the economy.”

In Feldbaum-Vidra’s view, an economic imbalance, appearing among other things in fast-growing and high foreign currency debt, particularly in the banking sector, gives cause for concern. However, she writes, “We feel market concerns about a banking crisis were exaggerated.”

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