The decision has been made by the government and Central Bank of Iceland
Iceland will lift all capital controls on its citizens, businesses and pension funds from Tuesday.
Capital controls, such as those to restrict money flowing in and out of the country, were imposed in 2008 after the country’s biggest banks collapsed.
The government thinks the economy has recovered sufficiently to end controls.
Controls were imposed after the collapse of the country’s three biggest banks – Glitnir, Landsbanki and Kaupthing.
At the same time Iceland’s national currency, the krona, fell in value.
‘Measured approach’
The removal of the capital controls – which helped stabilised the currency and economy during the country’s financial crash – represents the completion of Iceland’s return to international financial markets.
The move has also been supported by updates to the rules on foreign exchange and special reserve requirements for new foreign currency inflows.
“Iceland’s careful, measured approach to lift capital controls was developed and approved with domestic and international support,” said Benedikt Johannesson, minister of finance and economic affairs.
“As a result of this structured plan, our diversified economy is larger than ever before and expected to continue to grow at a robust pace this year.”
Capital controls were implemented in 2008, with the support of the International Monetary Fund (IMF), to shield the economy from severe depreciation.
For the past year, the government and Central Bank of Iceland have been lifting controls through what they say has been an “incremental, measured process that focused on protecting the currency, addressing a balance of payments problem and tempering shocks to the Icelandic economy”.
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