Iceland is set to lift the remaining capital controls that was imposed during the financial crisis in 2008, allowing its citizens to fully access the global capital markets, the finance ministry said Sunday.
With effect from Tuesday, capital controls on individuals, firms and pension funds will be lifted, the ministry announced.
"The removal of the capital controls, which stabilized the currency and economy during the country's unprecedented financial crash, represents the completion of Iceland's return to international financial markets," the ministry said in a statement.
Separately, the Central Bank of Iceland said it has concluded an agreement to buy offshore krona assets, equivalent to ISK 90 billion at an exchange rate of 137.5 krona per euro.
Offshore krona holders that have not made an agreement with the central bank will be invited to do so in the next two weeks.
The bank will use its foreign exchange reserves to buy offshore krona assets. Even after the transaction, the reserves will be of an amount well above the threshold specified during the prelude to the liberalization process, the bank said.
The country also updated the rules on foreign exchange and introduced special reserve requirements for new foreign currency inflows to avoid another destabilization.
Following the 2008 financial crisis, three biggest banks of Iceland collapsed and the economy faced an unprecedented balance of payment challenge.
With the approval of the International Monetary Fund, Iceland took protective measures in the form of capital controls which prevented the excessive capital flight.
by RTT Staff Writer
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