kostnaðarsamari

Kostnaðarsamari is a term used in the context of samarineyðir, a type of Icelandic financial system. It is often translated to mean "cost Darwinism" or "cost survival of the fittest," although a more accurate translation would be "cost-directed evolution" or "cost-driven adaptation."

In this context, kostnaðarsamari refers to a specific mechanism by which financial institutions adjust their costs and funding levels in response to changing market conditions. The concept is based on the idea that financial institutions should be allowed to fail or merge in times of financial stress, thereby accelerating the process of adaptation and improving overall efficiency in the financial system.

The term is derived from the concept of Darwinism, which describes the process of natural selection. However, it is not a literal application of the concept, but rather an analogy used to describe the adaptive process of financial institutions.

Kostnaðarsamari is not a widely accepted or formal term in mainstream finance, but it has been used by some Icelandic economists and policymakers to describe the optimal approach to financial system reform. It is often contrasted with traditional approaches, such as government bailouts or monetary policy interventions, which can perpetuate inefficient financial institutions and distort market incentives.

Overall, the concept of kostnaðarsamari highlights the importance of allowing financial institutions to adapt and evolve in response to changing market conditions, rather than relying on external interventions or rescues.