Icelandic Bank System

The economic and financial environment at the time of the loss Iceland, the teensy-weensyest of the OECD economies had a GDP of $11.8 billion in 2007. An open prudence, trade make up about 80% of the GDP. Until early 2008, Icelands economy was considered a high performer, Iceland having the fourth-highest gross domestic product per jacket crown in the world. Unemployment was first-class honours degree, between 0 and 1 percent, Iceland being rated as being the worlds best country to weather in on the basis of life expectancy, real per capital letter income and educational levels. Traditionally, Icelands economy was based on oceanic and energy. The picture changed in some expects from 2000. In 2001, banks were deregulated in Iceland. The bragging(a) and aggressive growth of Icelands banks started to become remarkable because of the small economy of Iceland. The main reason of the growth was facilitated by diffused access to credit and a domestic construction boom. The poor pursuit rates which were offered by the banks, long maturity and low down payments. The banks also supported refinancing of existing mortgages. As a consequence to all this mentioned the credit expanded and real estate prices roared. The government also implemented a tax simplification which caused consumer spending.

Between 2004 and 2007, with the intention to control inflation, the Central bank had to reprimand interest rates, short term rates rose from 5% to 15%, which attracted a lot of foreign funds and helped the coin to appreciate. In the same time there were low interest rates on the housing loans which sustained the housing boom. The steadfast currency in turn added fuel to the consumer boom in Iceland. The Icelander, who once were very short-handed and were not spending a lot started regular shopping weekends in Europe, buying go out cars, building bigger houses because of the low interest loans they were paying in foreign currencies. Icelandic bankers began roaming the world and aggressively seizing business. Having a small domestic... If you want to get a full essay, coiffure it on our website: Ordercustompaper.com

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