Catching a cold

Fears over the strength of the Icelandic banking system have caused the krona to plunge, prompting the country's central bank to hike interest rates to record levels. The initiative seems to have worked, with the currency rebounding and credit spreads tightening. But has the country really weathered the storm? By Wietske Blees

richardthomas-jpg

Events at Northern Rock in September last year starkly revealed the folly of underestimating the dangers posed by liquidity risk and over-relying on the wholesale markets for funding. Fears of subprime exposures in underlying portfolios prompted investors to shun the previously unstoppable securitisation market, causing new issuance to grind to a halt. Unable to raise new funds, and with billions of pounds worth of liabilities falling due, the UK building society had to turn to the Bank of

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here