Capital account liberalisation strategy – capital controls to be lifted by year-end 2013
Althingi, the Icelandic parliament, on Saturday enacted legislation regarding capital accounts proposed by the Minister of Economic Affair. The legislation is a step towards the normalisation of Icelandic capital markets following the breakdown of the Icelandic banking system and introduction of capital controls in October 2008.
To secure the liberalisation of capital controls without threatening financial stability, the legislation allows the extension of the temporary provision authorising capital controls until year-end 2013. However, the government may lift the controls at an earlier date if conditions permit. The proposal was amended in parliament; the provision was originally submitted to expire by the end of 2015. The legislation also puts into law the regulations on capital accounts set by the Central Bank of Iceland with the assent of the Minister of Economic Affairs.