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But as the global financial crisis of gathered momentum, investors began to get a bit jittery and confidence in those Icelandic banks faltered. Things were a little dicey for a time. The Icelandic parliament was divided. Nevertheless, it was a majority and under Icelandic law, the application for Icelandic membership could be submitted to the EU by the Icelandic government in July The groundwork had been set for the country to join the European Union.
At first, all went well. A number of EU member states announced that they were happy for Iceland to join, among them Lithuania and Malta. The Icelandic government completed a series of questions sent to them by the EU Commission. A negotiator was appointed. The privately-owned Landsbanki had been placed into receivership in autumn , one of three important financial institutions to go bust in a short space of time.
The British and the Dutch argued that they should repay some of the debt. Formal negotiations began later in Progress had been made with the Icesave dispute but fishing and whaling issues had yet to be resolved. And remember, Iceland was keen to secure EU membership as that would enable them to join the euro, seen at the time as a far stronger currency. As time went on, political opinion began to turn. By the end of , Iceland was getting cold feet.
With time to think, some felt that joining the EU might not be the solution it was once felt to be. Financially, the country was in much better shape. Perhaps it was prudent to buy some time. Maybe it could continue to go it alone, interacting with Europe on its own terms. Does Iceland use the Euro? No, Iceland does not use the Euro as currency.
The official currency of the country is the Icelandic Krona. However, you may be able to use Euros in certain shops and retailers. Main article: Icesave dispute The liabilities of the Depositors' and Investors' Guarantee Fund arise from the — Icelandic financial crisis , which saw Iceland's three main commercial banks collapse within the space of a week. One of those banks, Landsbanki , had taken retail deposits from more than , British and Dutch customers through its branches in London and Amsterdam , through a product known as "Icesave".
At the time of the economic collapse, the Depositors' and Investors' Guarantee Fund had equity of only The initial reaction of the Icelandic authorities was to disclaim state responsibility for the shortfall in the insurance fund, pointing out that both the Guarantee Fund and Landsbanki were private corporations although the Guarantee Fund was set up and operated under a specific Act of Parliament.
Loan agreement[ edit ] Iceland finally reached bilateral agreements with the United Kingdom and the Netherlands on 5 June First Icesave bill[ edit ] On 28 August , the Althing Iceland's parliament voted 34—15 with 14 abstentions to approve a bill commonly referred to as the Icesave bill to regulate the repayments.
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