Creditors float the idea of a fund for public good in Iceland
The foreign creditors of Glitnir and Kaupthing understand full well that they will not get the foreign assets of these two estates until a way has been found to deal with their ISK assets. There is not – and will not be for the many coming years – enough foreign currency in Iceland to convert their ISK assets. All of this is explained in an earlier Icelog.
Tonight, I reported on Rúv (in Icelandic) of an idea to put some of this ISK problem aside, so to speak. The idea is that considerable funds, perhaps ISK50bn from each estate, ISK100bn, €3.1bn, will be put in a fund, which will become the property of the Icelandic nation. The fund could be used for public good such as initiatives in education and health.
The government has said it wants to “extract” – how, is still unclear – considerable funds out of the liquidation process in order to fund an extensive debt relief fund, called “correction fund” for those who are too well off to have profited from earlier debt relief. It will be interesting to see what its reaction will be to this new idea – no comments forthcoming when Rúv sought comments tonight.
Meanwhile, the capital controls continue to hurt Iceland. Icelandic investors with money abroad shy away from bringing funds to Iceland. Salary is low in Iceland compared to the neighbouring countries. The government might think it is safest to wait and see – but that is actually a very expensive option for Iceland.
The Glitnir estate has hired the economist Lord Eatwell president of Queen’s College Cambridge as its special adviser in the winding-up process of the estate.
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Do you have reliable sources behind the statement that this idea was floated by some of these creditors? It sounds to me like a political scheme intended to throw off the focus on the disoriented Government.
Kristján Birgisson
22 Aug 13 at 12:24 am
This is one idea of many being discussed but the outcome is all but clear. In general, many things have to fall into place before Glitnir and Kaupthing can negotiate a composition.
Sigrún Davíðsdóttir
22 Aug 13 at 8:02 am
Is it just me, or does this sound like a slush fund for the coalition parties’ core constituencies?
Knute Rife
3 Sep 13 at 3:42 am
I don’t doubt your words that this is one of the ideas being discussed in the society. I’ve not seen any evidence however linking the idea to any creditors, as you suggest in the entry.
Perhaps someone is throwing dirt in our eyes?
http://www.mbl.is/vidskipti/frettir/2013/09/25/afskriftir_ekki_i_thagu_throtabuanna/
Kristján Birgisson
25 Sep 13 at 9:17 am