There is high demand for credit in the banking system in Iceland and levels of investment have increased, according to director of Íslandsbanki, Birna Einarsdóttir. She says that society finds itself in a very different place today than in 2007, before the banking crash.
The banks have to be responsible and careful in their investments in the tourism sector, she says.
Birna was a guest on RÚV radio this morning and said that there are certain stress points appearing and that they need to be carefully monitored. It is especially important to compare data from now and in 2008 and actively work to avoid similar economic overheating.
“Today’s economic growth is driven by private consumption. Private consumption back then was highly debt driven. It is not very much so now,” Birna explains.
She says that household and business debt is shrinking and that the economic landscape looks very different now to 2007/8—adding that things look positive.
“Of course, we have seen a lot of investment in tourism services. The banks need to play a role in being responsible and following the total volume and demand so that we take the right decisions.”