Iceland’s Government to Review Monetary Policy

Minister of Education Thorgerdur Katrín Gunnarsdóttir said in an interview last weekend that the government agrees that reviewing the monetary policy is one of the most important tasks at hand and that it needs to be undertaken soon.

Gunnarsdóttir, who is also vice-chairman of the Independence Party, criticizes the Central Bank for not having permitted Icelandic banks to adopt the euro as their operation currency. That was an ill-advised decision which contributed to their bankruptcy, she told Fréttabladid.

Leaders of the opposition parties have proposed a monetary union with Norway, an idea which Norwegian officials have said they are willing to discuss. Gunnarsdóttir does not approve of that idea.

“I don’t think it is realistic. This always happens when the EU discussion is resumed; then other solutions are suggested. Of course we should examine other possibilities, but I believe that if we are going to abolish the current monetary policy, it is natural for us to strive for EU membership,” Gunnarsdóttir said.

In relation to Landsbanki’s Icesave accounts, the minister believes it was a mistake to permit the bank to open Icesave accounts in the Netherlands considering the British Financial Supervisory Authority had issued criticism of the Icesave accounts in the UK.

Gunnarsdóttir also said it may be necessary to reestablish the National Economic Institute, which provided research on economic matters, but was shut down in 2002.

icelandreview.com