Bankers Start to Question Iceland’s Ballooning Currency Reserves
- Central bank has raised currency reserves by 62% since 2014
- Reserve build-up promotes stability as krona controls eased
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As Iceland sets itself up for a final exit from capital controls, the nation’s bankers are starting to question the costs involved.
The central bank holds 760 billion kronur ($6.8 billion) in foreign exchange, up by more than 29 percent in a year and 62 percent from 2014. It’s buying the inflow of currency from a tourism boom, in order to keep the krona in check and to build buffers for when the last controls are removed. For now, that’s costing the country money, according Jon G. Omarsson, chief financial officer at lender Islandsbanki hf.