3.8.12

4 Factors contributed to Iceland's financial crisis

1. Rating agencies over estimated the capacity of sovereign support

2. Investors and creditors relied on the high credit ratings to lend to the banks directly or through the CDO market.

3. The CBI accepted dubious or lower quality collateral as banks posted each other's bonds as collateral.

4. Domestic banking supervision in Iceland was considered extremely weak and didn't detect questionable business practices.

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