Swedish Expert: Icesave Debt Load Should Be Shared Skip to content

Swedish Expert: Icesave Debt Load Should Be Shared

Frida Fallan, an expert in the Swedish Central Bank, states in a draft of a letter sent to Lars Nyberg, the bank’s assistant governor, in early December 2008 that the UK, the Netherlands and the European Union should share the Icesave debt load with Iceland.

Photo by Páll Stefánsson.

In the letter, on which Morgunbladid reports today, Fallan argues that the supervisory and deposit insurance system was seriously flawed and that British and Dutch authorities had not sufficiently informed their citizens about the position of the Icelandic deposit insurance fund.

Fallan states that if the Icesave’s customers had known that the fund contained only ISK 19 billion (USD 148 million, EUR 106 million), they would probably not have deposited their savings with Icesave, which was the online savings unit of Iceland’s Landsbanki in the UK and the Netherlands.

“Iceland has been hit harder by the crisis than any other European country and so it is weighed down by an immense debt load,” Fallan writes, continuing:

“Therefore the host countries of the Icelandic banks in particular and EU leaders in general should admit that Iceland’s problem was not only created because of irresponsible lending and an insufficient reaction by Icelandic authorities, but also, to a considerable extent, because of the obsolete supervisory system of the EU.”

The agreement between Icelandic, British and Dutch authorities on Iceland’s obligations towards the Icesave depositors and the loans granted to Iceland to honor these obligations is currently being debated at Iceland’s Althingi parliament.

According to Fréttabladid’s sources, the opposition’s 29 MPs intend to vote against the agreement while the entire parliamentary group of the Social Democrats, of which Prime Minister Jóhanna Sigurdardóttir is chair, will approve it.

If only three MPs of the Left-Greens, the other ruling party, decide to vote against the agreement, it will be rejected.

Four of the party’s members, Gudfrídur Lilja Grétarsdóttir, Lilja Mósesdóttir, Atli Gíslason and Minister of Health Ögmundur Jónasson, have all voiced doubt concerning the agreement.

Click here to read more about the Icesave debate.

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