The view from Iceland
13 March 2013
The ACT is keen to support the development of the treasury profession across the EU and wider Europe and one or two of my sharper eyed followers on twitter will have noticed my appearance at the first finance and treasury conference held recently in Iceland. What were my impressions?
Iceland has come through a ferocious downturn driven by the financial crisis. Icelandic banks and entrepreneurs drove a huge asset expansion internationally - both legally and illegally – but which came home to roost when those banks collapsed and were allowed to fail. The currency halved in value almost overnight, a huge political barney erupted and even for stoic Icelanders of Scandinavian descent, there was considerable emotional dislocation. More recently the Icelandic economy has been growing steadily but modestly at 2-3 % pa, unemployment has fallen to 4.5%, half the amount it was at its peak and the budget deficit that reached 13.5% of GDP in 2009 fell to 2.3% last year, although it will take time to heal some deep social wounds from the banking collapse. Having 99% of energy needs freely available from geo-thermal sources has also helped in creating new export-driven industries especially in aluminium smelting and the fall in the currency has driven increasing volumes in inward tourism.
For any of you who have never been, Iceland is a raw, windswept, physically beautiful environment, mostly self-sufficient in food and natural materials. The natural challenges they face have made the people here tough, tenacious, very diligent but charming and welcoming to visitors. I would thoroughly recommend a visit!
Twelve hundred years of Viking settlement have bred a resourceful and spiritual people and despite their setbacks Iceland has a sophisticated and professional business class that is eager to learn and implement good treasury practice. The people I met were optimistic about rebasing the economy away from financial services and becoming part of the international business community again. I have every expectation that a formal professional treasury and finance association will take root and become part of the wider european treasury community.
By Peter Matza