A political stand-off has begun between Britain and Iceland after Iceland nationalised three of it's banks leaving a cloud of uncertainty hanging over subsidiary banks in The UK. Gordon Brown moved swiftly to guarantee ALL private deposits regardless of whether they exceeded the £50,000 ceiling. Less certain is what will happen to the public money on deposit with Icelandic banks. Over 100 local councils, 96 police authorities and countless charities are thought to have funds at risk, and the UK government is making use of fraud legislation to 'freeze' the assets of Icelandic companies in response.So far the Icelandic government have kept quiet about whether they will repay the public money owed to UK local councils, and unless there is a move to reassure depositors soon, the whole situation threatens to get ugly. The problems are due largely due to the outrageous growth of Icelandic banks fueled by foreign debt, a debt which dwarfs the domestic economy. Iceland will now be looking to borrow from Russia to preserve it's now fragile economy. Meanwhile the domestic currency, the Icelandic Krona is in free-fall.
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