that are unlikely to change. the biggest problems are institutional, political, and – perhaps most of all – societal : they centre on fiscal policy decisions, collective bargaining agreements, and overall societal consensus. these we can change. the marvellous thing about icelanders is that we have never let trivial matters like population undermine our steadfast belief that we can stand shoulder - to - shoulder with other countries in everything that we endeavour to do – if we only take the matter seriously enough. this is the attitude that we should take towards economic policy. in this context, i agree with icelandic independence leader jon sigurðsson when he warned about icelandic individualism, saying, “ many tend to think of iceland as being alone in the world and deny that other countries ’ experience matters. ” it is never stressed often enough or loudly enough that monetary policy is social welfare policy. economic volatility generally leads to unexpected changes in people ’ s personal situation – particularly for people with low income. the cost of inflation is more onerous for low - income people and causes purchasing power to fluctuate. successful economic policy reduces the level of uncertainty in people ’ s everyday lives, and price stability delivers increased purchasing power and a predictable housing market. economic 3 / 4 bis central bankers'speeches stability is a normal and appropriate thing for people to demand – and the principal objective of the central bank of iceland. successful monetary policy is therefore extremely important for general well - being and reduces the likelihood of poverty, while economic policy mistakes are costly, not least for those with the lowest income. increased credibility of monetary policy leads to lower interest rates, thereby improving debtors ’ situation. it is therefore of vital importance that we agree as a society to maintain economic stability through thick and thin. honoured guests : influenza epidemics are nothing new. in the past 500 years or so, there have been about two to three influenza pandemics per century. it is likely that no one remembers the asian flu of 1957 or the hong kong flu of 1968 any longer. but these were deadly pandemics that took place in the twentieth century, even though they paled in comparison with the spanish flu, which killed between 21 million and 50 million people worldwide. what is unique about covid - 19 is not the illness itself but the response to it. the disease control measures adopted around the world are unparalleled. they come at an enormous economic cost and could easily bring with them a deep, but hopefully short - lived, economic

system links domestic and foreign financial markets. it is the lifeline of any currency. if that lifeline is cut, the consequences are catastrophic. in simple terms, this is what happened when the icelandic banking system collapsed. there was a real danger that a vicious circle, as capital fled isk - denominated assets, could have amplified major difficulties faced by highly indebted households and businesses. when an entire country ’ s financial system collapses, as was the case here, it can take a long time to make it fully operational once more. as a result, it could take some time, given the global financial crisis, for foreign credit markets to re - open, as turned out to be the case. in view of the fact that considerable refinancing of treasury debt was scheduled for 2011 and 2012, there was clearly limited scope to use the central bank ’ s foreign reserves to mitigate exchange rate fluctuations without risking the treasury ’ s ability to refinance or pay off the loans maturing in these years. for whatever reason, when it came down to it, the imf was not prepared to extend loans to facilitate in the reconstruction of the icelandic economy unless it could be guaranteed that funds provided would not be sucked down a whirlpool of capital fleeing the country. the capital controls provided the authorities with leeway to restructure the financial system, get a grip on treasury finances, and deal with the problems of debt - ridden households and businesses. all of this is a prerequisite for regaining the trust of international credit markets in the icelandic economy and in the ability of the treasury to meet its obligations. since the controls were tightened, they have contributed to greater exchange rate stability than has been seen for a long time, albeit at a lower level than is desirable. this stability has facilitated implementing economic policy. it therefore comes as no surprise to hear the view expressed that the capital controls should be maintained on a more permanent basis. this is not as attractive an option as might appear at first glance, however. in the first place, liquid capital cannot be kept here forcibly for an indefinite period of time. the controls are a violation of various international agreements signed by iceland. they are tolerated as long as iceland follows the economic recovery programme supported by the imf, and thus indirectly by the member states of the eea, oecd, and the fund itself. soon after this programme concludes, the controls will likely have to disappear ; i. e., if the