Iceland today welcomes the announcement from the EFTA Surveillance Authority (ESA) that Icelandic laws on the treatment of offshore krona assets are compliant with the EEA agreement.
Ms Lilja Alfreðsdóttir, Minister for Foreign Affairs and External Trade says:
“This decision unequivocally confirms that Iceland acted correctly and lawfully in the process of lifting capital controls. The EFTA Surveillance Authority's decision does also acknowledge that Iceland had full rights to implement actions to guarantee economic stability. We had expected this decision by ESA as the Authority had earlier this year given strong indications to the effect that the claims that were filed against Iceland were unfounded. Now this has been confirmed.”
In June this year the EFTA Surveillance Authority 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.