At that time, the ICB modified currency custody controls but not FX controls. Something like 70% corporate borrowing was and remains issued and settled in foreign currency. Let us note here, the infrastructure Reykjavik Energy is constructing will supply an Alcoa plant. Trade will be denominated in USD not EUR. Some pertinent if dated consideration, apart from Reykjavik Energy's book: Rules on foreign exchange - Central Bank of Iceland - 15 Dec 2008
Article 4 Borrowing and lending between domestic and foreign parties for purposes other than cross-border transactions with goods and services shall meet the following requirements: Each party's loan shall not exceed 10,000,000 kr., or the equivalent of that amount in foreign currency, per calendar year. The loan period shall be at least one year. Capital transfers for the loan shall be in accordance with the provisions of Article 9 of these Rules [Article 9. Obligation to submit foreign currency]. Loan agreements, including all appendices and accompanying documents, shall be sent to the financial undertaking that carries out the movement of capital within one week of signing. The provisions of this Article do not apply to borrowing and lending between undertakings within a conglomerate [transfer pricing between units anywhere in the world].... Article 6 It is prohibited to transact derivatives contracts involving the Icelandic króna against a foreign currency, whether these are contracts involving currencies, securities, or a combination of currencies and securities, or other comparable financial instruments. Derivatives transactions related solely to trade with goods and services do not fall under this provision. Article 8 Interest, indexation, dividends, capital gains, and contractual instalment payments are not considered movement of capital in the sense of these Rules. Wages are not considered movement of capital in the sense of these Rules. Cross-border prepayment of financial instruments is prohibited, however. Article 14 The provisions of these Rules do not apply to movement of capital or foreign exchange transactions undertaken by the Central Bank of Iceland. The Rules do not apply to: 1. The Treasury and companies in which the Treasury owns a majority holding, and which operate according to special legislation. 2. Municipalities and companies in which municipalities own a majority holding, and which operate according to special legislation. Companies that are parties to investment agreements with the Government of Iceland, which agreements have been assigned legal validity or are concluded on the basis of special statutory authorisations. Companies that have been granted permission by the Minister of Industry to search for oil according to Act no. 13/2001. Resolution committees that have been appointed on the basis of Article 100a of the Act on Financial Undertakings. Undertakings with over 80% of their revenues and expenses abroad may apply for an exemption from Articles 1, 4 - 6, and 9 of the Rules. Those undertakings that believe they meet the requirements set forth in the first sentence shall send an application to the Central Bank of Iceland and demonstrate that they fulfil the conditions. The application shall be accompanied by a confirmation from a chartered auditor. A list of parties that have been granted such exemptions will be published on the website of the Central Bank of Iceland. Commercial banks, savings banks, and credit institutions are authorised to engage in spot, forward, and swap transactions with foreign currency. Furthermore, commercial banks, savings banks, and credit institutions are authorised to take foreigndenominated loans to finance their activities or to refinance previous debt. Commercial banks and savings banks are authorised to receive money market deposits in Icelandic krónur from foreign parties.
Article 6 It is prohibited to transact derivatives contracts involving the Icelandic króna against a foreign currency, whether these are contracts involving currencies, securities, or a combination of currencies and securities, or other comparable financial instruments. Derivatives transactions related solely to trade with goods and services do not fall under this provision.
Article 8 Interest, indexation, dividends, capital gains, and contractual instalment payments are not considered movement of capital in the sense of these Rules. Wages are not considered movement of capital in the sense of these Rules. Cross-border prepayment of financial instruments is prohibited, however.
Article 14 The provisions of these Rules do not apply to movement of capital or foreign exchange transactions undertaken by the Central Bank of Iceland. The Rules do not apply to:
1. The Treasury and companies in which the Treasury owns a majority holding, and which operate according to special legislation. 2. Municipalities and companies in which municipalities own a majority holding, and which operate according to special legislation.
Commercial banks, savings banks, and credit institutions are authorised to engage in spot, forward, and swap transactions with foreign currency. Furthermore, commercial banks, savings banks, and credit institutions are authorised to take foreigndenominated loans to finance their activities or to refinance previous debt. Commercial banks and savings banks are authorised to receive money market deposits in Icelandic krónur from foreign parties.
Sure was HOT today. phew. Diversity is the key to economic and political evolution.
