‘Severe’ risks around lifting capital controls, Icelandic report warns

Central Bank of Iceland
Central Bank of Iceland

If appropriate measures are not taken before lifting capital controls, Iceland runs the risk of "severe instability" in the foreign exchange market, according to the Central Bank of Iceland's latest financial stability report, published yesterday.

The central bank identified capital account liberalisation as one of the "main threats" to stability currently facing the country, although policy-makers have made clear that controls will not be lifted until data implies the economy is ready for it.

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