Iceland’s top finance heads have gone cap in hand to Moscow for a 4 billion euro loan to ward off bankruptcy.
Russia is reported to be looking favourably on the loan, but at a much higher than normal interest rate.
The bail out would be welcome news for Britain’s investors and local councils who have pumped more than a billion euros into Iceland’s banks.
And, despite the nationalisation of three of them, Iceland’s stock market went into free fall today, ending almost 80 percent down.
Thordur Fridjonsson, CEO of Icelandic Stock Exchange said: “ The banks were dilisted, or removed from the exchange, so that is really causing this huge drop in the index.’‘
Iceland’s currency has become almost worthless with foreign banks refusing to trade the Krona.
The price of many basic products has risen sharply in the last week. With people starting to panic buy supplies of certain goods could run out in weeks.