Iceland's president vetos bank repayment bill

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Iceland's president vetos bank repayment bill

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The president of Iceland has vetoed controversial legislation that would have forced taxpayers to pay for the country’s failed banks.

Thousands of angry Icelanders petitioned the head of state not to sign the bill after parliament narrowly approved paying back some 4 billion euros to Britain and the Netherlands.

President Olafur Ragnar Grimsson’s decision means Iceland will now hold a referendum on the issue.

Addressing reporters he said: ‘‘It has steadily become more apparent that the people must be convinced that they themselves determine the future course.’‘

The UK and Netherlands were forced to compensate a massive 3.8 billion euros to around 300,000 British and Dutch savers who had money in Iceland.

That deal was drawn up after Icesave, the online arm of Landsbanki, collapsed following the country’s financial meltdown during the height of the international credit crisis in 2008.

Almost a quarter of Iceland’s 240,000 voters signed the petition demanding the president reject the repayment plan.

However, many analysts believe the move could put aid from international lenders and the crisis hit country’s aspirations to join the EU in serious jeopardy.