Unfortunate for Icelanders that AUR was totally botched, as well as them not appreciating its potential.
Iceland fiat holders about to get shafted Cyprus-style:
Iceland’s plan to impose an exit tax as part of removing capital controls anticipates all bank assets will be subject to levy, regardless of whether assets are held in ISK or FX, Morgunbladid reports without saying how it obtained the information.
http://www.zerohedge.com/news/2014-12-10/iceland-unleashes-confiscatory-exit-tax-wealth-deposits@ solex these capital controls and exit taxes are being imposed on big foreign hedge funds trying to take their money out of Iceland. Icelands economy is only $15 billion dollars big and these foreigners say they are owed $6 billion dollars which is 40% of the people wealth.
This exit tax will help to keep iceland's economy alive
see the whole story here @
www.aurorapr.co.vu The Icelandic state will probably get a loan from IMF for $6-7 billion, the amount needed to pay the foreign creditors of the banks. The claim is in ISK (about 700-800 billion ISK) and the Icelandic state will get 30% discount in their pocket, 70% of the claim will therefore be payed out with government borrowed foreign currency and the Icelandic state will therefore end up with 800 billion ISK and a debt for $6-7 billion. The people of Iceland are going to pay off this IMF bond for the next maby 10-30 year or so.
Then the question is what will the Icelandic state do with the 800 billion ISK they now have in their pocket. They can go on a spending spree and use the money (ISK) in some Icelandic social welfare program. But no matter what they use the 800 billion ISK on it will all end up in domestic inflation. If they pay up domestic bonds, the money will come into circulation and will be used to by the domestic creditors (mostly pension funds) to buy up local stocks or they lend it out again. In the end the money 800 billion ISK will come into the domestic money supply and we know what happens when a currency is inflated, lets call it an "airdrop", the value of the currency drops.
But this is not the worst part. Now the ISK has depreciated (lets say about 30-40% over 2-3 years) and now the Icelandic state has to start paying off the newly $6-7 billion 10-30 year bond. With an economy that has gone through 30% depreciation of the currency the payment burden of this debt is now much harder.
So in the end this is a socialization of the Icelandic private bank collapse, just happening 6-7 years after the collapse. The debt will be payed by the Icelandic people through inflation, the "beautiful" hidden tax that takes away the wealth of a nation.