Iceland Central Bank Acquires Major Króna Assets in Luxembourg Settlement
What happened
The Central Bank of Iceland reached an agreement with the Banque centrale du Luxembourg and the liquidator of Landsbanki Luxembourg S.A. to purchase 98% of outstanding Avens B.V. bonds. These bonds were collateral for a liquidity facility provided in 2008. Under the terms, the Central Bank of Iceland will gain full control over Avens B.V. assets, which hold approximately 120 b.kr. in króna-denominated assets outside Iceland. The Central Bank of Iceland will remit a large portion of the purchase price using a 15-year Treasury bond valued at 402 million euros.
From icenews.is
Why it matters
The agreement allows the Central Bank of Iceland to gain control over the largest single owner of króna-denominated assets outside Iceland. This resolution addresses the fallout from the Icelandic banking crisis and involves the management of significant foreign-held króna assets. The assets will be administered by ESÍ ehf., the Asset Holding Company of the Central Bank of Iceland.
From icenews.is
Who's involved
- IcelandThe nation whose Central Bank concluded the agreement to purchase the bonds.
- LuxembourgThe country where the agreement was signed and where the collateral was held.
- central bankThe public institution that concluded the agreement to purchase the bonds.
- Yves MerschThe Luxembourgian economist involved in the successful settlement agreement.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- IcelandSpeculative
Iceland might see debt reduction and capital account liberalization following the bank collapse settlement.
Possible ripples
Who this could reach next, traced step by step from the reporting. Possibilities worth considering, not forecasts.- Mersch's BCL helps Iceland settle banking crisis falloutMersch's BCL successfully concludes major Icelandic banking settlementAlready happening
- Iceland's banking settlement may strengthen European Economic AreaIceland's financial stabilization could reinforce the European Economic Area's stabilityLikely
- Iceland's banking settlement may stabilize its EFTA standingIceland's banking settlement may stabilize its EFTA standingPossible
- Icelandic settlement could stabilize operations for Century AluminumIcelandic financial settlement may stabilize operations for Century AluminumPossible
Keep exploring
The entities involved
-
Luxembourg
country in Western Europe
-
Iceland
Nordic island country in the North Atlantic Ocean
-
central bank
public institution that manages a state's currency, money supply, and interest rates