in government bond yields in august and september have a bubble like pattern that is often described as going down the stairs and coming up on the lift ( or vice versa, if one considers price rather than yield ). it is likely, then, that factors in addition to the mpc statements were at work here. these could include unusually large leveraged positions, the structure and effectiveness of the market, and a typical bubble phenomenon featuring extreme tension right before the bubble bursts. for its part, the central bank will investigate what happened and draw the appropriate lessons from it. but this could be useful for others as well. at all events, if market participants are interested in leveraged speculation on the duration of the capital controls, they are free to engage in it. but if they do, it is their choice and their responsibility. the removal of the capital controls is certainly further off than many observers thought earlier this fall, but a delay of several years is not in line with announced intentions. in closing, i wish to say this : a great deal of progress has been made towards establishing stability, and monetary policy has played a large role in that process. at present, the task at hand is to create a strong foundation for lasting output growth and reconnect iceland to the global capital markets. monetary policy will have less of a role in these matters, but the central bank will have a sizeable role in restoring iceland ’ s connection with global markets. this applies both to participating in entering foreign credit markets and to formulating a regulatory framework for more prudent external financial relations than iceland had before the crisis. but that is a subject for another occasion. thank you.

instalments and interest on two bond series maturing in 2011 and 2012, less repurchases, amount to 1. 1 billion euros. this positive development explains the relatively upbeat outlook of foreign bankers and analysts towards iceland, as could be discerned at the annual meetings of the imf. it also explains why the cds spread on sovereign debt has fallen in recent months and now lies below that of the european countries whose public debt problems have dominated business media recently. but we have to do better if icelandic companies are to gain access to foreign credit markets on acceptable terms. iceland ’ s sovereign cds spread is higher than the underlying fundamentals warrant, and positive developments in the next few months could make quite an impact on it. credit rating agencies and others have given us a clear indication of which factors are most important : reducing uncertainty about domestic financial institutions, resolving the icesave dispute, and demonstrating signs of economic recovery. but where do we stand? has the turnaround begun? according to the forecast published by the central bank last wednesday, it has : seasonally adjusted gdp is projected to have grown between the second and third quarters of this year. this assumption is supported by various high - frequency indicators such as groceries turnover and payment card turnover. as the chart shows, we assume that this trend continued in the current quarter, although we expect growth to be somewhat less. in examining the chart, however, the viewer should bear in mind that quarterly gdp figures are quite volatile and measurements can show a small contraction in individual quarters, even though such a dip would not be considered to constitute an economic recession in the conventional sense. but in connection with the economic outlook, it is important to remember that consumer confidence appears to have taken a bit of a dive in the past few weeks ( see chart 2 ), concurrent with the beginning of the legislative session in early october and the demonstrations that took place at the time. while one hopes that the situation will reverse quickly, this decline underlines the fragility of the recovery and the fact that the “ attitudinal crisis ” could have an unwarranted negative impact on economic developments in the months to come. according to the central bank ’ s forecast, gdp will continue to grow in the medium term. it is expected to grow by around 2 % year - on - year in 2011, 2. 7 % in 2012, and 3 % in 2013. this will suffice to reduce unemployment beginning in q2 / 2011, as