Why Iceland?

Asgeir Jonsson was chief economist at Kaupthing until its collapse and later became governor of the Central Bank of Iceland. He wrote this within a year of the failure, before his more technical later book with Hersir Sigurgeirsson.

The account covers Iceland's economic history, the liberalisation and bank privatisation of the early 2000s, the banks' rapid international expansion, the funding shift from wholesale markets to retail internet deposits in Britain and the Netherlands, the carry trade inflows that the high domestic interest rates attracted, and the collapse of all three banks within a week in October 2008.

Jonsson argues that the fundamental problem was the mismatch between the banks' foreign currency obligations and the central bank's reserves, which meant Iceland could not act as lender of last resort to its own banking system in the currencies the banks owed. He also covers the international dimension, including the refusal of foreign central banks to extend swap lines to Iceland while extending them to others, which he treats as decisive. He is writing about institutions he worked for and had a personal stake in, which readers should weigh throughout. The book was written before the Special Investigation Commission report and before the prosecutions, and his later work with Sigurgeirsson is more technically complete.