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Iceland Much Better Prepared For Potential Banking Collapse

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Iceland Much Better Prepared For Potential Banking Collapse

Money - Icelandic Króna

Photo: Páll Kjartansson

The Icelandic banking system is much better prepared for a potential collapse than it was prior to the 2008 crash. Vísir reports.

According to the Central Bank of Iceland, any crisis, such as a decrease in travellers to the country can be dealt with. The housing situation has improved greatly for the past years and the outlook shows continued economic growth for the coming years.

Loans to homes and companies, especially companies in the tourist industry, are increasing, although the Central Bank doesn‘t see any reason for worry as it goes hand in hand with continued economic growth.

Overall the outlook for the Icelandic economy is quite good, with homes and companies in a good position for amortising their loans. According to Harpa Jónsdóttir at the Central Bank, this is mainly due to the tourist industry, which has now reached similar levels as the fishing industry.

„The current outlook is pretty good. Conditions have been decent and the economy is going strong. Lending has, however, increased so we need to be on our toes.“

Were the tourist industry to suddenly fail, up to about 4.500 AirBnB apartments could enter the general market, causing a decrease in price.

If the banks were to collapse right now, the banking system would be much more suited to handle it than it did back in 2008. „There‘s much more equity and liquid resources in the system now.“

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