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Investment Banking in Crosshairs as Iceland Explores Limits

  • Finance minister says risks of big investment banks remain
  • Proposal has similar aims to U.K. ring-fencing requirement
Pedestrians walk along a snow covered street in the shopping district of central Reykjavik, Iceland, on Thursday, Jan. 14, 2016. 

Photographer: Arnaldur Halldorsson/Bloomberg

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Few countries conjure up images of financial ruin like Iceland. Its economy was famously gutted in 2008 when its over-sized banks all collapsed within weeks of each other.

A decade later, the island nation is still trying to crisis-proof its financial system. A key goal is to shield banking operations that are vital to the economy, such as deposit-taking, payments and lending. To that end, the government is taking a page from Britain’s post-crisis playbook with a plan to force banks to separate their retail and investment operations.