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Internal Market: Iceland's restrictions on offshore króna assets are not in breach of the EEA Agreement

23.11.2016

PR(16)53 

EN  |  IS

The EFTA Surveillance Authority (ESA) today closes two complaint cases and finds that Icelandic laws on treatment of offshore króna assets are in compliance with the EEA Agreement. The laws are part of measures for removing capital controls in Iceland.

The EEA Agreement permits an EEA State to take protective measures when it is in difficulties as regards its balance of payments. In such situations the states are allowed to implement a national economic and monetary policy aimed at overcoming economic difficulties, as long as the criteria for these protective measures are met.

“Iceland's treatment of offshore króna assets is a protective measure within the meaning of the EEA Agreement. The overall objective of the Icelandic law is to create a foundation for unrestricted cross-border trade with Icelandic krónur, which will eventually allow Iceland to again participate fully in the free movement of capital,” states Frank J. Büchel, the ESA College member responsible for financial markets.

Further detail

In June 2016, ESA received two complaints against Iceland concerning the treatment of holders of offshore króna assets. The complainant argued that the criteria for the protective measures are not met in the current economic circumstances in Iceland.

In its closure decision, ESA took the view that although the Icelandic economy is now stronger, there is still a possibility that the lifting of capital controls would destabilise capital flows, causing renewed difficulties with the balance of payments.

The EEA States enjoy a wide margin of discretion in this respect when choosing to adopt these types of protective measures.

In making its closure decision, ESA has concluded that the Icelandic Government has not erred in exercising its discretion.

Read the full decision

For further information, please contact:

Ms. Anne Vestbakke
Head of Communications
tel. +32 2 286 18 66
mob. +32 490 57 63 53




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