Cool under fire: Iceland takes the fight back to finance

Policymakers in Reykjavik are acting to shore up the island’s economic standing but stability may come at the cost of ceding its prized independence
Fears that Iceland could be the first country to fall victim of the global financial turmoil grew when its central bank abruptly raised interest rates
The publication of first-quarter results for the three leading Icelandic banks suggests that the country’s banking storm of 2008 may finally be blowing itself out
Iceland’s inflation rate hit a 20-year high of 11.8 per cent in April, leaving the Central Bank’s latest forecast in tatters and making further hikes to its record breaking interest rates more likely.
Björgólfur Gudmundsson, owner and chairman of Landsbanki, says the island needs a war chest to bolster its economy’s defences against outside threats
The government is investigating an alleged speculative attack involving manipulation of the CDS market and distribution of misleading information
Iceland has the highest rates in Europe after the central bank raised rates by 0.5 per cent as it strove to restore confidence in its struggling currency and stave off a banking crisis

Policymakers in Reykjavik are acting to shore up the island’s economic standing but stability may come at the cost of ceding its prized independence
The European Central Bank tore up its own rulebook to bail out Iceland, the giant hedge fund off the west coast of Norway that owns large parts of Britain's high streets

On many indicators, Iceland is a sound economy, even if there are weaknesses that hamper monetary policy, says Wolfgang Münchau

A strategy of debt-fuelled expansion that worked well for years is now being punished by investors – some say unfairly