I understand that they relaxed these controls because the country is thriving on tourism, free volcano energy and fish; and that Iceland wanted to cool the economy and allow foreign money to flow back into to the country.
But also money that wanted to leave is able to now? I guess. It's a little confusing.
Here are some Things I've read or heard and I DON'T fully understand because I'm not a smart man. Can anyone speak about these in layman's terms? Thanks...
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How did the capital controls actually work in practice? Is it Iceland just saying to outside investors "Sorry you can't buy krona?"
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Many Icelandic people didn't like the capital controls because it made it harder to leave the country and spend money outside Iceland. But Wouldn't their Krona be worth more under capital controls? And isn't that a good thing for traveling? Why were they happy to see the krona decrease in value a little? Is this because they want more people to visit? And because housing prices were going up to fast maybe? But wouldn't more people coming to the country keep those prices up?
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The agreement iceland made with foreign krona holders amounted to a 20% "haricut". So they lost 20% of their investments in Iceland? I guess this has to do with the exchange rate?
So these are companies or hedge funds who had assets in Iceland post 2008 and were unable to pull out?
3 . How does this relate to what Malaysia did with their capital controls and maybe by extension what China is doing with theirs?
Thank you. I am not an economist but this is really interesting to me.
