Iceland guarantees deposits to get loans

[Coventina]

Source: Associated Press

LONDON (AP) — Iceland moved to secure $6 billion in loans to refloat its collapsed financial system as Britain said Monday it would welcome a government promise to guarantee its citizens' deposits in collapsed internet bank Icesave.

The International Monetary Fund agreed last month to loan Iceland $2.1 billion (1.7 billion euros) and help the country raise $3.9 billion (3.1 billion euros) worth of loans from other countries. But approval stalled because Britain argued Iceland needed to first pay back its citizens' deposits in collapsed banks.

It said depositors should get up to 21,000 euros ($26,600) from accounts in Icesave, in line with European Economic Area rules. Iceland is not part of the European Union, but its membership in the European Economic Area allows the country to participate in a free economic zone along with the European Union member states.

Both the IMF and the European Union told Iceland that they would not give loans to the country until the dispute was settled. On Sunday, Iceland's Prime Minister Geir Haarde agreed to guarantee the money.



Read more: http://www.google.com/hostednews/ap/article/ALeqM5jIxT0aBF3S3FsDhFV_537Ljj9fkQD94GOJK02