STOCKHOLM Feb 25 Iceland's central bank said in
a statement it will consider offering exemptions to its Foreign
Exchange Act for derivatives trading, marking another step
towards lifting the country’s capital controls.
It said in a statement on Friday that it would accept
applications for long-term hedging aimed at mitigating exchange
rate risks and enabling firms to correct foreign exchange
imbalances on their balance sheets.
The central bank's move is aimed at assessing to what extent
companies need and are interested in such hedging, as a way to
prepare for full liberalization.
The capital controls, imposed at the height of the financial
crisis in 2008 to shore up a tumbling krona, have left the
country isolated from international financial markets and have
In November last year, the Central Bank said Iceland could
fully remove all its remaining capital controls during 2017
thanks to its growing foreign exchange reserves and a strong
The central bank said exemptions would not be available for
speculative derivatives trades at this stage due to their lower
priority in the liberalisation process.
The bank said it would consider granting exemptions based on
specific conditions including the length of the contracts
involved, the hedge ratio, timing, and information disclosure to
the central bank itself.
(Reporting by Bjorn Rundstrom; Editing by Hugh Lawson)