Iceland’s stock exchange lost about 76% of its value in October 2008 during the global financial crisis.
The collapse followed the failure of Iceland’s heavily expanded banking sector. Before 2008, Icelandic banks had grown rapidly and accumulated liabilities far larger than the country’s economy could comfortably support. When global credit markets froze after the failure of Lehman Brothers, the banks struggled to refinance their foreign debts.
The Icelandic government took control of the country’s three largest banks in October 2008. Trading in many financial shares was suspended, and the OMX Iceland 15 index was dramatically reduced when trading resumed. The banking collapse also caused the Icelandic króna to fall sharply and required international assistance.
The 76% figure refers to the stock-market index’s October collapse, not a 76% fall in every Icelandic company or in the currency. Iceland’s crisis was a particularly severe national episode within the wider global financial crisis.