RNH Academic Director, Professor Hannes H. Gissurarson, reads a paper on the Icelandic bank collapse in a session on money and banking at the annual conference of APEE, Association of Private Enterprise Education, at Caesars Palace in Las Vegas 1–5 April. The session is scheduled for 2:30–3:45 pm Monday 2 April. Gissurarson’s paper forms a part of the joint project of RNH and ACRE, Alliance of Conservatives and Reformists in Europe, on “Europe, Iceland and the Future of Capitalism.”
In his paper, Gissurarson briefly describes the events leading up to the bank collapse and argues that six lessons may be drawn from the collapse and the Icelandic experience: 1) It is not necessary that governments always rescue banks. 2) It is reasonable to give priority to depositors over other bank creditors. 3) If this is done, then government guarantees of deposits are unnecessary. 4) Discretionary power will always be abused, such as was the case with the British Anti-Terrorism Act of 2001, invoked against Iceland. 5) Small states have no real friends and have to fend for themselves. 6) Firm leadership is crucial in crises, such as the CBI, Central Bank of Iceland, showed when it proposed ‘ring-fencing’ Iceland and splitting up the banks into domestic and foreign entities.