Bankahrunið

Bankahrunið, often translated as "the banking collapse," refers to a severe financial crisis that took place in Iceland beginning in the autumn of 2008. This event saw the near-total collapse of Iceland's three largest privately owned banks: Kaupthing Bank, Landsbanki, and Glitnir. The rapid growth and leveraged expansion of these banks in the years leading up to the crisis had made them significantly larger than the Icelandic economy could support.

The crisis was triggered by the global financial downturn, but its roots lay in the unchecked expansion of the Icelandic banking sector. As the value of assets held by the banks plummeted and their ability to access international funding dried up, they became insolvent. The Icelandic government was forced to take drastic measures, including nationalizing the banks and imposing capital controls to prevent money from leaving the country.

The consequences of bankahrunið were profound for Iceland. The Icelandic króna depreciated sharply, inflation soared, and the stock market crashed. Unemployment rose significantly, and many businesses struggled or failed. The crisis led to widespread public anger and protests, demanding accountability. Iceland sought assistance from the International Monetary Fund (IMF) and implemented a recovery program that involved austerity measures and financial restructuring. Over time, Iceland has managed a significant economic recovery, though the memory of the banking collapse remains a defining moment in its modern history.