Protests and riots followed, eventually forcing the government to be replaced by a newly formed left-wing coalition.
The coalition eventually gave in to the outside demands that Iceland pay off a total of three and a half million Euros. This would require each Icelander to pay $130 per month for fifteen years, at 5.5% interest, to pay off a debt incurred by private parties vis-à-vis other private parties. It was the straw that broke the reindeer’s back.  What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered. The Head of State, Olafur Ragnar Grimsson, refused to ratify the law that would make Icelanders responsible for bankers’ debts, and supported calls for a referendum. International community was furious!  The world only increased the pressure. Great Britain and Holland warned of dire reprisals that would isolate the country including cutting off aid from the IMF and freezing Icelandic foreign bank accounts. Read More…