Iceland’s government proposed disbanding the Housing Financing Fund, the nation’s largest mortgage provider, as the lender struggles to make a profit amid loan losses and competition from commercial banks.
Iceland advertised the position of central bank governor after the current incumbent Mar Gudmundsson questioned the government’s intention to push through the world’s biggest household debt relief program.
Iceland’s decision to break with global crisis-fighting efforts and raise interest rates this month may presage the return of the very same carry trade that channeled fast money into the country before its banking crisis.
Iceland’s central bank cut the benchmark interest rate by three-quarters of a percentage point as inflation eased to the slowest pace in more than five years after capital controls shielded the krona and demand slumped.
Iceland’s central bank cut the benchmark interest rate by half a point after international lenders said the island’s efforts to rebuild its financial system were on track, supporting the krona as bailout flows resumed.