Skip to: Content
Skip to: Site Navigation
Skip to: Search


Could the Credit Crunch Sink a Whole Country?

Posted Mar 26, 08 9:10 AM CDT in Business World 

(Newser) – The global credit crisis has spelled disaster for banks and hedge funds, but now worry is mounting that an entire country could go under. Yesterday the central bank of Iceland was forced to raise its interest rate 1.25 percentage points to 15% at an emergency meeting, reports the Financial Times. The surprise move was a desperate effort to curb runaway inflation and prop up the krona, a currency in free fall.

"We are a small open economy and we are obviously affected by moves in the international economy," Iceland's central bank governor said. Yesterday's rate cut saw the krona jump, but if confidence in the financial system continues to wane, the country's banks could suffer a run and spell serious trouble for the tiny Nordic nation. One analyst chose his words carefully, saying, "Let’s say Iceland is not in more danger than some Wall Street banks."

Sources Financial Times (UK), Bloomberg

0 comments | Print E-mail | Digg Seed this on Newsvine Add this link to Del.icio.us StumbleUpon
Reykjavík, the capital of Iceland. Iceland's central bank was forced to raise interest rates to 15% yesterday at an emergency meeting.   ((c) Bob Jagendorf)
Iceland's central bank was forced to raise interest rates to 15% yesterday at an emergency meeting.   ((c) karynsig)
A 100 krónur bill. Iceland's central bank was forced to raise interest rates to 15% yesterday at an emergency meeting.   ((c) James Cridland)
« Prev« Prev | Next »Next » Slideshow
Our editors also recommend:

Threads (
1
 of 4)



Loading...

Today's Most Popular

Loading...

Other World Stories


What is Newser?

2008 Codie Finalist

Face it: there's too much news. At Newser a team of editors and writers culls the most important stories from hundreds of U.S. and international sources and reduces them to a headline, picture, and two paragraphs. It's the Newser guarantee: we can take any report or column or video and pack what you need to know into 120 words or less. Newser's short-form aggregation, visual format, and unique information tools help you get more of the kind of news you want, in a quicker and more entertaining way. And we do it 24/7—you can come back morning, noon, night (and in between) for something new that matters. Read less, know more.

Learn more »