PRESS RELEASE FROM THE CENTRAL BANK OF ICELAND:
The Central Bank of Iceland guidelines from early October on temporary modifications in currency outflow have been revoked. The guidelines were adopted in the wake of the failure of three commercial banks and the ensuing market disturbances.
Thereafter, the Central Bank began trading foreign currency from its foreign exchange reserves through daily auctions designed to facilitate foreign exchange business that had been obstructed due to difficulties in payment intermediation and other causes. The revocation of the guidelines means that there are no longer restrictions on current account related transactions.
Last week the Executive Board of the International Monetary Fund approved a Stand-By Arrangement for Iceland. The economic program entails continuing restrictions on movement of capital between Iceland and other countries and the subsequent lifting of those restrictions as soon as an sufficient stability has returned to the foreign exchange market. Parliament has passed a legislative bill from the Minister of Business Affairs, amending the Foreign Exchange Act of 1992. This new Act authorises the Central Bank, upon consultation with the Minister, to adopt rules restricting cross-border movement of capital. This authorisation has now been utilised, and the Central Bank will issue on its website Rules on Foreign Exchange based on the authority contained in the new Act.
The aim of the Rules is to maintain restrictions on capital outflows that could have a negative impact on the reconstruction of the foreign exchange market. The Rules stipulate that those who acquire foreign currency must submit it to a domestic financial institution; however, such foreign currency may be deposited to a foreign currency account in such an institution. Restrictions are placed on movement of capital by parties intending to exchange Icelandic krónur for foreign currency.
Furthermore, the Rules prohibit trading between domestic and foreign parties in domestic securities and other króna-denominated financial instruments. Foreign parties are prohibited from purchasing króna-denominated securities through the intermediation of domestic parties, unless they already own króna denominated assets that can be used for this purpose. Furthermore, foreign parties are prohibited from issuing securities in Iceland. Domestic parties are also prohibited from investing in foreign securities. Foreign borrowings, provision of guarantees to foreign parties, and derivatives transactions unrelated to trading of goods and services are restricted or prohibited, as are loans granted by domestic parties to foreign parties.
It should be noted that an auction of Treasury notes will be held during the first week of December. Foreign parties owning Treasury notes on the maturity date, December 12, 2008, may reinvest the proceeds in new Treasury notes.
It is emphasised that all current account restrictions on foreign exchange transactions have been abolished. The restrictions now adopted on the basis of the newly passed legislation include foreign exchange transactions related to movement of capital between Iceland and other countries. These restrictions are an necessary part of the measures intended to restore stability in the foreign exchange market. They will be lifted as soon as circumstances allow.
Codman62 said:
Kevi if you use your card abroad you will pay the ECB exchange rate wich is today 280 KR for 1 Euro..you can check on this link..
http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html
This is not true of purchases I have made with credit card and cash withdrawals from foreign ATM’s.
As I mentioned before, both these are calculated at the Iceland official rate and are so evident in my bank statement..
That ECB rate is something else altogether.
I’m just coming back from Sweden. I’ve been using my credit card a lot. No problem at all and good lords no I didn’t get a euro for 280kr or something. It’s pretty simple: rates are available in visa.is or kreditkort.is whether you have a mastercard or a visa. The rates are slighty less advantageous than the banks.
Ex today a euro is worth 185 for a mastercard.
Axel:
” I dont understan why its increasing because we are not inporting anything and exporting alot
no one is buying anything, realestate sales are 0
same goes for cars and other items, how can inflation still increase so fast, i dont get it ”
Are you sure?
Central Bank of Iceland – Economic indicators in November 2008 – says this:
– CPI: 1.7% on prev. month / 17.1% over 12 months.
– Domestic goods excl. agricultural products: 1.8% / 20.9% .
– Agricultural products: 4.0% / 22.8% .
– Imported goods excl. alcohol and tobacco: 2.5% / 27.0% .
– Food and beverages: 5.9% / 59.3% .
– Cars and spare parts: 1.0% / 26.0% .
– Petrol: -1.5% / 23.4% .
– Imported goods excl. food and beverages: 3.8% / 24.2% .
– Housing: 1.4% / 10.5% .
– Groceries (perishables): 3.9% / 30.6% .
” CB will probably raise rates to 20% soon,
probably a wave of bankrupcys when that happens. ”
Icelanders should understand that a negative interest rate is not possible: this would harm the economy of the country, absolutely. Negative interest rate can only be placed when we anticipate that inflation will fall quickly, and very briefly: it is not the case in Iceland, since when currency floats, prices still will raise. It is not possible because a negative rate, would destroy the economy, would drive away to the economizers and investors.
Kevi if you use your card abroad you will pay the ECB exchange rate wich is today 280 KR for 1 Euro..you can check on this link..
http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html
Over 7000 people are now unemployed in Iceland and a large part of them are native Icelanders,
lots of immigrants are in the building industry and its frozen right now, some 4-500 bn isk in bonds(jöklabréf) are due soon and when that happens it would flow out of the country very quicly and the economy can not survive that, thats why we now have restrictions, the krona will be floated in the next few days and hopfully recover, without the restrictions all attempts to float the krona would be useless and very expensive.
From Spain
November inflation, 17.1%
i dont understan why its increasing because we are not inporting anything and exporting alot
no one is buying anything, realestate sales are 0
same goes for cars and other items, how can inflation still increase so fast, i dont get it
CB will probably raise rates to 20% soon,
probably a wave of bankrupcys when that happens.
Kevi,
You should be able to withdraw just fine from an atm abroad.
You should get the official rate of exchange. It may not work every day but most days. The limit for one day withdrawal will apply, about €200.
If you have enough of Icelandic cash in your account here you should anyway continue to withdraw in foreign currency every day while you are outside the country. It makes some sense as long just as you don’t decide to spend more.
You may well get a “why don’t you go home” “what are you still hanging around for” but it’s just in jest.
I somehow suspect that IMF will not be pleased with this at all… remember, IMF did not get the money right away, it set up credit line, it can suspend payments at any time.
Cfood – How are Icelanders forcing you out of the Country? I too am a Foreigner and have not met any more aggresion from the locals than before The Kreppa, saying that I’m still half-expecting to receive a ”Why don’t you go home” drunken rant one day from someone though ;-(
I’m hoping The Kreppa can pull everyone together and build up relations between foreigners and Icelanders.
Does anyone know how it works using a Icelandic Bank card abroad? I’m going home for Christmas and although I have enough cash to cover the period in the home country, just curious to find out if I needed more money that the ATM’s would swallow my Landsbanki card.
THE NEXT PRESIDENT .. GOOD FOR YOU. I AM HAPPY TO SEE YOU WILL NOT LOSE YOUR JOB AND SAVINGS IN ICELAND HARD TIMES. SORRY ABOUT CAPS!
*my plan is available, * expecting to get, *and many of them,
You see ORCHAFINE that my is still viable? As soon as the króna weakens greatly again I will transfer my moneys from the accounts named in foreign currency into accounts in isk. And, the plan is to let the money grow and take advantage of the high interest I am going to have every months. I am expecting on getting 250.000 isk (after taxes deducted) every month. Which literally means that I am going to live in this country for free until the economy gets better and the króna stronger. Then, with a stronger krónur (or its equivalent if other currency is adopted) I will go out of the country having living for free here and saved much more money and getting much more euros. THIS IS THE PLAN, but for doing well in the country all you need is some millions and 0 DEBTS. Most of icelanders have HUGE DEBTS, no money in the bank…. and many NO JOBS. I am a foreigner and I have a great job working as a teacher. And, as long as the kids will receive education in this country I will keep my job. I have been teaching here for more than 4 years and you should know that after 3 years your teaching position is permanent… I REALLY HOPE THIS COUNTRY WILL GET BETTER SOON. ICELANDERS NEED TO LEARN FROM MANY MISTAKES AND TO MAKE DEEP SOCIAL AND ECONOMIC REFORMS. I hope this country and its society to be a good model after all that.
johnny, good idea but a little late. There is now a 3 month waiting period, in USA at least, to buy gold coins or bullion. But get this! The folks selling the gold are selling ‘paper’, a contract, that you own the gold. The problem is they(gold dealers) are selling the same contracts hundreds of times to different people like the banks did in over leveraging. Point: if you buy gold, take delivery! Do not tell anyone, even your wife, husband, mama, daddy etc. Shakespere quote= ‘2 people can keep a secret if one of them are dead’.
@ Konny Bejaminsdottir: “Did you sag your proofreader?” ahahahahhahhaha, did you SACK *your* proofreader. It seems standards are slipping everywhere, not least of all, your own!
I am a foreigner living here who somehow, just like every other foreigner I know, has lost his job. From what I percieve in this article, not only are the icelanders forcing us out of the country, but they are going make it illegal for us to send money back to our children here. Do they plan on helping the mother of my child and my child and every other family whose father or mother has to leave, help pay the bills. How am I supposed to get money to my family? Once again, I feel that my family and I are being persecuted because of my nationality. But I think opinions on foreigners will change as more icelandics are forced abroad for work and realize that they are no longer known as wealthy people. They will be arriving in other countries as poor immigrants and feel the full force of karma.
It means exactly that:
Payments to abroad i.e. wire transfers will be CLOSED until further notice.
The maximum amount for transfers from ISK accounts to foreign currency accounts is ISK 50,000.
There are no restrictions on transfers between foreign currency accounts in the same currency within Kaupthing Bank, whether they have the same national ID numbers or not.
There are also no restrictions on transfers from foreign currency accounts to ISK accounts.
This is hogwash. Still no real free krona flotation. So anyone wishing to sell ISK has to deposit resulting proceeds into Iceland bank account?
You wish…
I think you guys should be buying as much gold as you can get your hands on.
Orchafine WAKE UP! drink some coffee or something,. What you cannot do is buy, sell, send or make any movement from icelandic accounts to banks abroad. But you can put your money in you icelandic bank named in dollars, euros or whatever as long as your money is in the icelandic bank in those accounts called Dollar or euros accounts. What you cannot do is to buy currency in paper money and get out of the country with it. And, you still can use your debit and credit cards abroad. What I am doing is converting my money in my bank from accounts named in euros to kronurs and so back, anytime I want to. Does does not mean that I am buying foreign currency to take out of the bank. I cannot take dollars or euros from the bank, but I can maintain my kronurs in the shape of dollars or euros in my bank and then sell them when I decide with the risk that if the króna gets suddenly strong I could loose some money. BUT the krona has to get as strong as 127 isk EUR for me to start loosing. ANYWAYS it seems that the krona is going to weaken further…. WAKE UP! Have a double expresso…
Iceland needs to open up the economy like they did in the 90’s. Less regulation and freer trade.
someone explain that please
Nobody has said/spoken about icelandic inflation in November; why? Is not this interesting? Same thing in October. Why?
Central Bank of Iceland: November inflation, 17.1%; October 15.9% .
Iceland Review must be taking a heavy hit with the economic crisis. The quality of the English news took a slide on this article. Did you sag your proofreader? Are you too overworked to use your grammar and spell checker? Reductions in quality of life everywhere.
Bye-bye kronor …
There it goes away Gus stratagem…