Iceland's Financial Crisis in an International Per spective

Iceland became one of the symbols of the financial crisis that gripped the world in 2007 when its banking system collapsed in October 2008. We show how Iceland played both a passive role in absorbing savings surpluses within the Euro pean single market as well as an active role when some of its capitalists turned its commercial banks into investment banks to fund their foreign adventures. The causes of the collapse in 2 008 are described as well as the response of the economy to the banking crisis. Finally the role of the independent currency in the fall and recovery of Iceland is highlighted.