About the Ministry
Historical overview of the Ministry of Economic Affairs
The Ministry of Economic Affairs was founded on 1 October 2009. In the wake of the banking crisis of October 2008, authorities commissioned Kaarlo Jännäri, a Finnish banking expert, with analysing the legal and operational framework for financial supervision in Iceland and delivering proposals on necessary reform. One of his proposals was grouping the main subjects of economic policy making in one ministry, which had been spread over many ministries before.
In order to reach these aims and others, legislation on the Government Offices was amended and the Ministry of Economic Affairs was created in its current form. The new ministry received subjects regarding economic policy from the Prime Minister‘s Office (PMO) and the Ministry of Finance (MoF), including the monitoring of the Central Bank of Iceland and Statistics Iceland. The operations of the PMO‘s economics office were transferred to the ministry, as well as part of he economics office of the MoF. Furthermore, subjects regarding accounting, auditing and annual accounts were transferred to the ministry.
The ministry also inherited most of the subjects of the Ministry of Business, including the monitoring of the Financial Supervisory Authority, the Icelandic Patent Office and the Competition Authority. However, subjects regarding international trade agreements were transferred to the Ministry for Foreign Affairs and subjects regarding consumer protections were moved to the Ministry of the Interior.
Among the major challenges facing the ministry in its first years were financial sector reform and supervision, legislation following the High Court ruling regarding foreign denominated loans, reform of the depositor guarantee scheme, formulating a strategy on capital account liberalisation and correspondence with the EFTA Surveillence Authority regarding the Icesave-dispute. The ministry oversaw the Stand-by Arrangement with the International Monetary Fund from its foundation until the end of the Arrangement on 26 August 2011.
Historical overview of the Ministry of Business
The Ministry of Business was founded on 17 April 1939. From the establishment of the ministry, commerce in the world has been transformed and the subjects of the ministry have generally reflected international developments.
In the first years of the ministry, during World War II, import and currency related topics were at the forefront. The ministry oversaw the granting of importing and currency licenses, which were both heavily regulated at the time. After the war, the ministry increasingly participated in international fora regarding economic and business affairs, which were gradually established following the war, and during 1948-1953 the Marshall Plan was one of the major projects the ministry was involved in. Trade agreements with other states were the ministry‘s main objectives for the following years. Until the mid-80s severe pricing restrictions were in place, with the ministry supervising pricing regulations. The ministry also handled some agricultural subsidies until 1992.
Internationally, the Ministry of Business oversaw correspondence with the OECD and tasks regarding Iceland‘s membership of the tariff and trade organization GATT. Furthermore, the ministry spearheaded Iceland‘s negotiations on accession to EFTA, which Iceland joined in 1970. The ministry was active in negotiating the European Economic Area and had an imporant role in coordinating the agreement, i.e. with regard to foreign direct investment policy in Iceland.
When Iceland joined EFTA, imports were liberalised, capital controls were gradually eased and all restrictions removed as of 1 January 1994.
As trade and commerce were liberalised and restrictions lifted, the main aims of the ministry were to regulate business. Important subjects at the ministry included i.a. competition, financial markets, company law, contract law, consumer protection and commerce in general.
The Ministries of Industry and Business were managed jointly, with the same staff and offices, according to the Prime Minister‘s decree from 2 June 1992, in accordance with legislation on the Government Offices, until 24 May 2007. One minister governed both ministries from 28 September 1988 to 24 May 2007.
