The Collapse of the Icelandic Financial System and its Multifarious Impact on Constitutional Law

Following rapid growth of the Icelandic economy for several years, based mainly on the expansion of the country’s largest commercial banks following their privatization in the early years of the twenty-first century, the situation had deteriorated in 2007. The consequences were felt suddenly and very severely in Iceland at the end of September and in the first days of October 2008. The collapse of the Icelandic financial system in the autumn of 2008, and the ensuing economic crisis, brought about a variety of unexpected consequences and unprecedented questions involving Icelandic constitutional law. A number of legal complications evolved with respect to the winding up of the Icelandic banks and other financial institutions, not to mention the wide and drastic implications of the collapse for the nation’s economy.