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specifically, in February 2006 the government established a group consisting of
representatives from the Prime Minister’s Office, the Ministry of Finance, the Ministry of
Economic Affairs, the Central Bank and the Financial Supervisory Authority, the objective of
which was to create a platform for communication between these institutions in case of a
financial shock. The group was also meant to provide recommendations for actions in case of
a crisis. However, this group was not established by law and did not have access to
confidential data and other information that was necessary in order to give proper guidance
following a market downfall.61 Furthermore, the group did not start to draft an emergency
plan until March 2008 and the ministry representatives in the group were halting the creation
of a clear reaction strategy up until the collapse.62 Thus, no thought-out plan existed when the
banks collapsed in October 2008. Thus, at the time of the collapse, the reactions of the
ministers were not based on pre-prepared plans or strategies. For example, after the banking
collapse the Minister of Economic Affairs ensured the Icelandic population that all deposits
were government guaranteed, but there was no underlying analysis showing that the state had
the financial capacity to measure up to such promises.
The Financial Supervisory Authority
The Icelandic Financial Supervisory Authority (FSA), which is the primary surveillance
agency in the country, also failed in taking proper action. In late 2007 a special work group
which was to report on the soundness of the financial system was established within the FSA.
61
Special Investigation Commission (2010), ch.19.4.4.
62
Special Investigation Commission (2010), ch.19.4.4.