Iceland Banking Crisis

Iceland is the better example - during the boom years they were offered loans in Euro instead of their national currency. Then after the crash when their own currency was devalued in respect to the Euro, they were left with repayments they could not possibly service.

Reminds me of Iceland being on the hook for all those savings from people in the UK looking for better interest rates. It almost bankrupted the country since the size of their banking industry was much larger than their internal economy needed.https://en.m.wikipedia.org/wiki/Icesave_dispute

Go the Iceland route. Didn't they create new banks for the savings of the people, and let the old ones go bankrupt? That did set a lot of bad blood with foreign savers who'd just been lured in with high interest rates, but whose savings were not guaranteed by the Icelandic government. But in the end, that turned out alright.

Search for "Laiki bank account" and that gives plenty of info about Cyprus money re-appropriation, for example.Iceland bank issues were widely covered too

I think the major difference is that Iceland had its own currency and flexibility with regards to how it managed its banks. Italy, on the other hand is bound by the Euro and the EU banking regulations. This seems like it will not end well.

I wonder if Iceland's debt issues could interfere with this:https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_fi...(Though, perhaps it helps that the UK is no longer in the EU).

Great comment, excellent retelling of the historical event. If you want to see what the alternative looks like, look what Iceland did to its banks during their banking crises. Icelandic depositors had priority claims, haircuts for everyone else (in opposition to intense pressure for Iceland to make foreign investors and depositors whole).Importantly, notice near the end of the Wikipedia article an about how it talks about using currency devaluations for economic recovery versus labor policies

The PR skills of Iceland's government are terrible. They keep saying OMG we are going to go bankrupt. Surely then no one is going to lend them any money.I don't think other countries aren't asking for debts to be repaid. Then it's just the creditor of the banks which are asking for their money. Presumably the savers want to take their money out. So it's a run on all the banks of the country. But since they already nationalized the banks, surely they just have to print more currency. The curre

Unfortunately Iceland provides 1001 horror stories about doing that sort of thing ;-) (take out "cheap" mortgages in Euro, profit, currency takes a dive, oops..)

Iceland let its banks fail and protected the taxpayers, and a few years later the economy recovered just fine. It's at a much smaller scale than the US or EU economy though, but still.