Central Bank contemplates measures for the banks

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Central Bank contemplates measures for the banks

David Oddsson, governor of the Central Bank of Iceland, said yesterday that the Central Bank was contemplating measures to help the Icelandic banks through the international turmoil on financial markets.

“Not in any major way, though. We have been talking in confidence with the leaders of the banks and have not finished those talks,” said Oddsson to Fréttabladid.

Oddsson said that the ISK had been stronger than the bank had expected for the long term but they had expected its downfall to happen slower and later. He said that the banks had been stockpiling foreign currency.

“We thought that was positive because we did not want their equity to be weakened.” Oddsson said that the drop of the ISK was caused by domestic parties and not by foreign parties.

Bank directors of Landsbanki and Glitnir, Sigurjón Th. Árnason and Lárus Welding would not comment on the Central Bank’s measures. First they had to see what they were exactly about.

Vilhjálmur Egilsson, general manager of SA, the Confederation of Icelandic Employers, said that Central Banks all over the world were handing out loans to banks. “In that respect I find it natural that the Central Bank is going down a similar road.”

Egilsson said it was normal that the government did nothing special in terms of recent developments because the situation had first and foremost been created by a shipwrecked currency policy of the Central Bank which had to be reviewed. “It is really horrible that the rate of the currency is fluctuating to this degree.”