This 2009 edition of OECD's periodic survey of Iceland's economy examines the impact of the financial crisis and makes recommendation on how it should be managed.
Executive Summary Assessment and Recommendations Chapter 1. The Financial and Economic Crisis -Iceland's three main banks became vulnerable to a deterioration in global financial markets -Private sector balance sheets became vulnerable after a rapid expansion -An unsustainable, domestic-demand led economic boom developed -The banks were unable to resist the deterioration in global financial markets -Aftermath of the collapse of Iceland's main banks -Prudential supervision and regulation need to be strengthened -Annex 1.A1. Progress in structural reform Chapter 2. Challenging Times for Monetary and Fiscal Policy -The limits of monetary policy in a very small open economy -The future of monetary policy -Substantial fiscal consolidation measures are urgently needed -Measures to increase public revenues -Measures to contain public spending -Concluding remarks -Bibliography