Three Nordic central banks unveiled an unprecedented €1.5bn emergency funding package on Friday to support Iceland’s troubled currency and stabilise its banking system as the tiny north Atlantic nation tries to fend off the effects of the global credit crisis.

The plan allows Iceland’s central bank to acquire up to €500m ($775m, £400m) each from the central banks of Sweden, Denmark and Norway in the case of an emergency, the first time the region’s central banks have joined forces to help a troubled neighbour.