The situation in Iceland continues to be complicated and is losing out of control. After earlier had reported that the country will receive a loan of 4 billion euros in Russia, subsequently became clear that the transaction was unsuccessful. Because of the problems that stricken country, the central bank announced measures to stabilize the currency, and authorities now expect a delegation from the International Monetary Fund.
After nationalization in the financial sector gave no result and not returned confidence in the banking system in Iceland, the central bank announced in the national air that will fix the exchange rate of the krone to the euro at 131 kroner for the euro.

However, distrust of the markets was news after the rate was 144 kroner for the euro. The situation however improved after earlier had reached a level of 230 kroner for the euro.

What is happening in the island country is so complicated that the authorities have turned to foreign aid. The central bank announced earlier today that an agreement for a credit line of 4 billion euros in Russia, with a term of 4 years and the repayment rate of between 30 and 50 basis points over the London LIBOR.

Ultimately, however, knew that the loan has not yet agreed to further make the situation more complicated. It was even a formal communication from the press center of Russian Prime Minister Vladimir Putin, which says that the announcement of the deal is too premature and that negotiations continue.

The crisis situation has led to emergency measures by the government, which has taken control of the entire banking system in the country. Plans are through nationalization and merger of big banks to come to avoid bankruptcy. Along with this Finance Ministry has received the right to acquire up to 20 percent of mortgage loans of banks and savings funds that will be inserted into a special government fund.

It is expected that the entry of state companies to be convened general meetings that will restrict the powers of management and input of representatives in the governing bodies.

The reaction of rating agencies Standard & Poor’s rating was fast and the country fell by two levels from A-to BBB. The notice of the organization says that the state measures are aimed at reducing risks for the budget, but will significantly impede the operations of banks abroad.

Yesterday evening, it appears that banks will be able to continue their activities. Today things have totally deteriorated and the economy is facing a real danger, said the prime minister of the Horde on national television.

Russia will be credited Iceland 4 billion euros

Russia will credit the Central Bank of Iceland 4 billion euros, announced today by the institution.

The Russian ambassador to Iceland, Victor Tatarintsev, this morning informed the President of the Board of Directors, the Icelandic central bank that Russia is prepared to provide credit to the institution amounted to 4 billion euros. The loan will have a period of 3 to 4 years, the interest rate will be 30 to 50 basis points over LIBOR.

Government of Iceland has undertaken steps at the conclusion of such an agreement a few months. It is expected the contract to be finalized in Moscow with the participation of representatives of government and Central Bank of Iceland.

The loan will significantly enhance foreign exchange reserves of Iceland and will support positions in the Icelandic krona, says in the message of the institution.

Meanwhile, Reuters today announced that the Icelandic government will assume control of Landsbanki, which is the second largest bank in the country. This happens after the end of last month was privatized third largest bank in the country - Glitnir. Government specify that the bank deposits are guaranteed and it will continue to operate normally.

Banks in Iceland and its economy as a whole are monitored closely to the global financial crisis and the sharp reduction in the price of the Icelandic krona this year.

Concerns have focused mainly on whether the Icelandic banks may refinance its debt taken on their expansion abroad in recent years. Weakness of the krona increased the amount banks pay for the service of their debts.

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