Fjárkrísunnar

Fjárkrísunnar, which translates to "financial crisis" in Icelandic, refers to the severe economic collapse that Iceland experienced in 2008. This crisis led to the downfall of the country's three largest banks, Kaupthing, Landsbanki, and Glitnir, all of which had grown significantly in the years leading up to the collapse. Their rapid expansion, fueled by high leverage and an increasing reliance on wholesale funding, made them vulnerable to the global financial downturn.

The Icelandic government responded by nationalizing the banks and implementing capital controls to prevent money from leaving the country. This measure, while controversial, is credited with helping to stabilize the Icelandic economy and currency. The crisis resulted in a sharp depreciation of the Icelandic króna, significant job losses, and a contraction of the economy.

In the aftermath, Iceland underwent a period of economic restructuring and recovery. The government pursued policies focused on fiscal discipline and debt reduction. New, smaller banks were established to replace the failed institutions, operating under stricter regulatory oversight. The nation's reliance on its natural resources, particularly tourism and fisheries, played a crucial role in its eventual economic rebound. The experience of fjárkrísunnar has since been studied as a case of rapid economic growth followed by a dramatic collapse and subsequent recovery.