Friday, November 21, 2008

Labour New town - Reykjavik-on-Thames

Is the UK the next Iceland? Willem Buiter reckons there is a “non-trivial risk,” what with sterling dropping like a stone and long-term gilt yields beginning to edge up.

The risk of a triple crisis - a banking crisis, a currency crisis and a sovereign debt default crisis - is always there for countries that are afflicted with the inconsistent quartet identified by Anne Sibert and myself in our work on Iceland: (1) a small country with (2) a large internationally exposed banking sector, (3) a currency that is not a global reserve currency and (4) limited fiscal capacity.

Full post here on Buiter’s Moverecon blog

FT Alphaville » Blog Archive » Reykjavik-on-Thames

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