Iceland takes over some major banks

               Iceland suspended stock trading on its exchange for two days. The government also used some of the emergency powers to take control of the country's largest bank and also formed a new bank to take over some of the operations of another collapsed bank. All in all the icelandic government seems to be in charge of three major banks and also seems to guarantee most domestic deposits under their law.

                     Earlier most of these banks had run up debts to finance projects across europe, especially in britain and had problems in refinancing these debts due to the drying up of liquidity. Some of the councils in britain also seem to have investments in the three icelandic banks.

    Some people seem to think that most of the current crisis in Iceland may be due to the deregulation of the markets without proper regulations in the 1990's by the independence party.

    Another reason seems to be the inflation targeting done by the central bank by raising interest rates over the past few years which led to a bubble with unnaturally high interest rates.
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tags: iceland, meltdown, financial,
liquidity, greed , stock market, banking

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