Two of Iceland’s Central Bankers Refuse to Resign Skip to content

Two of Iceland’s Central Bankers Refuse to Resign

Central bank governors Davíd Oddsson and Eiríkur Gudnason have refused to resign despite receiving a request from Prime Minister Jóhanna Sigurdardóttir that they step down. The third governor, Ingimundur Fridriksson, has complied with her request.

Central Bank governors Eiríkur Gudnason (left) and Davíd Oddsson. Copyright: Icelandic Photo Agency.

According to Fréttabladid, Oddsson, who is also chairman of the board of governors, replied to Sigurdardóttir with a letter yesterday (which has been posted on the website of the Central Bank) in which he accused her of violating laws intended to protect the Central Bank’s independence and shield the board of governors from “political attacks.”

Oddsson said the letter he had received from the PM had contained “poorly-disguised threats” and that such a letter was “unheard of, not only in Iceland, but probably also in the entire western world,” claiming that no one, not even those who are most keen on having him removed from the Central Bank, could criticize his work there.

Oddsson also criticized the new government for having suspended Baldur Gudlaugsson as undersecretary of the Ministry of Finance and described it as “administrational malpractice” when former Minister of Business Affairs Björgvin G. Sigurdsson made the director and board of the Financial Supervisory Authority (FME) redundant.

The PM issued a statement in response to Oddsson’s letter last night, expressing her disappointment with his attitude, saying that Oddsson obviously doesn’t share the government’s opinion that appointing new employees to the Central Bank will increase people’s faith in it. Sigurdardóttir does not intend to make any further comments on his letter.

Sigurdardóttir told Morgunbladid that it was honorable of Fridriksson to have complied with her request with his resignation. “I’m very grateful that he decided to cooperate with the government and make the reorganization [of the Central Bank] easier.”

According to Fréttabladid’s sources, Sigurdardóttir will not suspend Oddsson and Gudnason but wait until amendments on the Central Bank take effect, at which point they will automatically be made redundant and be entitled to salaries for 12 months from that date.

It is uncertain when these amendments will take effect. The bill will be discussed by the parliament’s economics and taxation committee today.

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