Now you get to guess how much is left before it gets to what is inside the box.
Iceland won a sweeping victory in a court fight over its responsibilities to foreign depositors in the Icelandic bank Landsbanki, which failed in 2008.
The court of the European Free Trade Association on Monday said Iceland didn’t breach European Economic Area directives on deposit guarantees by not compensating U.K. and Dutch depositors in Landsbanki’s online savings accounts, known as Icesave accounts.
Iceland’s banks took a lot of deposits for very high interest rates from Europeans. Then Iceland’s banks blew up. The nation’s deposit insurance fund didn’t have anywhere near enough money to pay everyone else — so it paid their citizens first, and left everyone else to twist in the wind. A vote on this matter was taken and the citizens decided.
The other EU nations screamed, threatened and ultimately sued.
Well, now they’ve lost.
Not only did they lose, they lost in a court where is no path for appeal. In other words, they really lost; it’s over.
This, incidentally, is not just a matter for Iceland, you see. There are other nations where demands have been made for citizens to cover other, non-citizen losses. I can think of a few… like, for instance…. Greece.
Now it is true that the situations are not exactly analogous, and this particular precedent is only going to bind in a circumstance where an EEA nation but not an EU member has a similar situation where some sort of guarantee program (e.g. a deposit guarantee program, in this case) has insufficient funds.
What this decision does is provide a solid backstop to the opinion that such a guarantee program does not reach beyond the fund and into the general finances of the nation involved, nor can that nation be forced to do so retroactively.
This matters folks.
The fuse has gone inside the box.
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