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Offshore Króna Bill Passed in Parliament

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Offshore Króna Bill Passed in Parliament

Bjarni Benediktsson

Finance Minister Bjarni Benediktsson. Photo: Geir Ólafsson.

A bill submitted before parliament Friday afternoon by Finance Minister Bjarni Benediktsson regarding so-called offshore króna accounts was passed late last night with 47 members of parliament voting for it, RÚV reports. Seven MP abstained. Prime Minister Sigurður Ingi Jóhannson expressed his pleasure over the unity reached about the issue in the short time given to pass the bill. He said it paved the way for lifting capital controls for the public and for Icelandic companies.

After the PM’s speech, voting on the bill proceeded. MPs of the Left-Green Movement, as well as those from the Pirate Party abstained.

The goal of the bill is to encourage the lifting of capital controls and create a basis for free international trade of Icelandic krónur. The bill stipulates how offshore króna assets will be treated, but they will continue to be subject to special restrictions.

A report quoted by RÚV indicates that offshore króna assets now amount to ISK 319 billion (USD 2.55 billion, EUR 2.28 billion) and that they have been trading abroad at a much lower exchange rate than at Icelandic exchange markets.

The bill requires deposit institutions to transfer their offshore króna assets by September 1 to accounts which are subject to certain restrictions. Foreign brokerage firms can apply to transfer their assets to accounts at the Central Bank of Iceland.

The Central Bank of Iceland will publish information about a planned foreign currency auction once the bill is passed into law, where all owners of offshore króna accounts will be given a chance to exchange them for Euros and thereby avoid restrictions outlined in the bill.

Since the financial crisis of 2008, capital controls have limited risk diversification in the asset portfolios of Icelandic residents and limited the ability of domestic firms to participate in collaborative projects with non-residents and to invest abroad.

You can view the entire bill here.

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