Iceland experienced the 2008 financial crisis known as the Icelandic financial crisis.
Iceland’s three largest commercial banks—Glitnir, Landsbanki, and Kaupthing—collapsed in October 2008 after rapidly expanding their balance sheets and becoming heavily exposed to international credit markets. Their combined obligations were extremely large compared with Iceland’s economy.
The crisis caused a sharp fall in the Icelandic króna, severe financial instability, and an emergency assistance program involving the International Monetary Fund and other countries. Iceland also introduced capital controls to limit financial outflows.
The Icelandic episode is sometimes confused with Ireland’s banking crisis or Greece’s later sovereign-debt crisis. Those events were separate, although all formed part of Europe’s wider financial turmoil.