Work continues on a mutually acceptable solution to Icesave

Key points:

  • The first referendum held since the foundation of the Republic of Iceland.
  • Initial figures indicate clearly that the December amendment to the Icesave legislation of August 2009 will be repealed. This means that Icesave Act 96/2009 of August 2009 remains in force in its unamended form, as passed by Althingi and confirmed by the President at the beginning of September 2009. Since the Governments of the United Kingdom and the Netherlands did not accept the preconditions and criterias entailed in the Act the Loan Agreements of 5 June 2009 can not enter into force on that basis.
  • Talks among the three Governments for an alternative resolution of the Icesave issue, however, have already begun. Negotiators have been meeting in London for the last three weeks for this purpose. These talks have been constructive and positive and the Government of Iceland is confident that a solution acceptable to all parties can be achieved.
  • All political parties in the Icelandic Parliament have expressed support for a solution to the issue that entails a guarantee by Iceland of the repayment of deposits up to the minimum laid down in the European Economic Area rules on deposit insurance schemes.
  • The Icelandic authorities will continue over the coming days in their strenuous efforts to achieve a satisfactory solution to the Icesave issue.

Today saw the first national referendum in Iceland since the foundation of the Republic. The referendum was on whether an amendment to the so-called Icesave Act should stand or be repealed, that is Act 1/2010 amending Act 96/2009 empowering the Minister of Finance, on behalf of the Treasury, to guarantee loans to the Deposit and Investor Guarantee Fund from the British and Dutch governments to cover payments of minimum deposit guarantees to depositors in Icesave accounts of Landsbanki Íslands hf.

Early figures indicate a decisive result and assuming final results in line with these figures, Act 1/2010 will be automatically repealed pursuant to Article 26 of the Constitution of the Republic of Iceland.

The referendum was called following the decision on 5 January by the President of Iceland to withhold confirmation of the amendment to the Icesave law, under Article 26 of the Constitution. Subsequently Althingi enacted a law on the conduct of the referendum and its date. However, the context for the referendum changed with the Government seeking and establishing a broad political consensus on the appointment of a new negotiating committee and new talks over the past few weeks with the British and Dutch authorities on a solution to the issue.

Over the past several weeks there has been a steady progress toward a settlement.  In the context of these new talks, the British and Dutch Governments have indicated a willingness to accept a solution that will entail a significantly lower cost for Iceland than that envisaged in the prior agreement. During the talks the Icelandic negotiating team has also put forward a proposal which entails that Iceland guarantees full payment of deposits up the minimum laid down by EEA rules.

The Icelandic authorities will continue to work towards a satisfactory solution to the Icesave issue on this basis. The three governments have declared their intention to continue the talks and find a solution to the matter.

 


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