Why Iceland’s market is melting

Few countries have enjoyed a rise as meteoric as Iceland's over the past few years. But a 'Northern Rock style-banking crisis' could see it collapse even more quickly.

Few countries have enjoyed a rise as meteoric as Iceland's over the past few years. But it could collapse even more quickly, as the economy dices with what Iain Dey of The Daily Telegraph calls a "Northern Rock style-banking crisis".

Kaupthing, its largest bank, is now rated by debt markets as about seven times more likely to default than its European peers. Thanks to cross holdings, whereby Iceland's main firms own stakes in its banks and vice versa, a banking collapse could spark a widespread meltdown.

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