Iceland and the International Monetary Fund Intent. The conditionalities include details of Banking Sector restructuring, changes to Fiscal Policy including government austerity and changes to exchange rate policies. Following the global financial crisis in 2007-2008 Iceland's banking sector collapsed leading to wide ranging unemployment and a lessening of support for the Icelandic currency - the Icelandic Krona ISK. This was triggered by an insolvency of the private banking sector. The largest Icelandic banks had liabilities in excess of 80 percent of GDP . Iceland requested assistance from the IMF and from its Nordic partners in the Nordic Council. The goal of Iceland in this market intervention
Monetary policy variable or device which the central bank uses to pin down expectations of private agents about the nominal price level or its path or about what the central bank might do with respect to achieving that path. Monetary regimes combine long-run nominal anchoring with flexibility in the short run. Nominal variables used as anchors primarily include exchange rate targets, money supply targets, and inflation targets with interest rate policy. In practice, to implement any type of monetary policy the main tool used is modifying the amount of base money in circulation. The monetary authority does this by buying or selling