11 Oct 2008

Icelanders furious as bankruptcy looms

9:04 am on 11 October 2008

Hundreds of Icelanders have vented their fury at central bank chief David Oddsson, the man blamed for the country's financial collapse, as the government appeared unable to ward off national bankruptcy.

Mr Oddsson served as the country's prime minister from 1991 until 2004 and orchestrated the liberalisation of the financial sector in the 1990s.

Hundreds of people gathered in central Reykjavik on Friday to call for his resignation as central bank governor.

They chanted "David out" and two women held a sign reading "Stay calm while we rob you".

The government has announced sweeping emergency laws, nationalised the island's three biggest banks and abandoned efforts to support the currency, which is in freefall.

Iceland has also halted all trade on its stock market. The stock exchange on Thursday said business would not resume until Monday.

The International Monetary Fund has sent a mission to Reykjavik and said it was ready to lend to countries hit by the global credit crunch. Prime Minister Geir Haarde said an IMF team was still in the country offering advice.

Iceland will also start negotiations with Russia on Tuesday to secure a 4-billion euro loan.

Mr Haarde has urged savers not to withdraw large sums of money from banks and called on people to remain calm.

Banking assets on Iceland amount to about nine times its gross domestic product; its current account deficit billowed to 16% of GDP last year.

From fish to finance

Home to just 300,000 people and previously best known for its geysers and other natural splendours, Iceland turned from a fishing-based economy to become an international financial haven in the past decade.

Its citizens enjoyed the trappings of prosperity as its banks expanded dramatically overseas, investors took large positions in its high-yielding currency and foreign money poured in to local projects.

All that changed last week.