Post-implosion Iceland has begun to reduce capital controls, testing its financial system.
If they can come back this fast, maybe the danger of financial crises is being blown out of proportion.
Bloomberg: The first step, effective yesterday, allows new investors to exchange the proceeds of their holdings for foreign currency, provided the transactions are registered with the financial supervisory authority and the central bank. The second stage, covering capital outflows, may take another year.
“The next phase of capital account liberalization — the removal of restrictions on capital outflows — will be determined by the success of this phase and the progress made under the macroeconomic program,” Reykjavik-based Sedlabanki said in an Oct. 31 statement.