Thorsteinn Thorgeirsson

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Thorsteinn Thorgeirsson (born September 17, 1955, in Reykjavík, Iceland) is an Icelandic economist who has primarily worked in government and international organisations.

Reykjavík Capital and largest city in Iceland

Reykjavík is the capital and largest city of Iceland. It is located in southwestern Iceland, on the southern shore of Faxaflói bay. Its latitude is 64°08' N, making it the world's northernmost capital of a sovereign state. With a population of around 128,793, it is the center of Iceland's cultural, economic and governmental activity, and is a popular tourist destination.



Formerly Director-General in the Finance Ministry of Iceland, [1] Thorgeirsson is a presently a senior advisor in the Central Bank of Iceland. [2]

Ministry of Finance (Iceland) Icelandic ministry

The Icelandic Ministry of Finance is responsible for overseeing the finances of the Icelandic government. The Minister for Finance and Economic Affairs is Bjarni Benediktsson.

Central Bank of Iceland Icelands central bank

The Central Bank of Iceland is the central bank or reserve bank of Iceland. It has served in this capacity since 1961, when it was created by an act of the Alþingi out of the central banking department of Landsbanki Íslands, which had the sole right of note issuance since 1927 and had conducted only limited monetary policy.

Prior to that, Thorgeirsson was Chief economist for the Federation of Icelandic Industries in Reykjavík from 2001 to 2004. He was an economist in the Economics Department of the OECD in Paris, France from 1995 to 2000. Before that, he was an economist in the Economics Department of the EFTA in Geneva, Switzerland (1993–1995), and the Economic Department of the Central Bank of Iceland (1991–1993). [3]

Chief economist is a single-position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the planning, supervision, and coordination of the economic research.

European Free Trade Association organization

The European Free Trade Association (EFTA) is a regional trade organization and free trade area consisting of four European states: Iceland, Liechtenstein, Norway, and Switzerland. The organization operates in parallel with the European Union (EU), and all four member states participate in the European Single Market and are part of the Schengen Area. They are not, however, party to the European Union Customs Union.


Thorgeirsson studied economics from the New School for Social Research in New York, NY, receiving the M.Phil. degree in 2005. He holds a Master of Arts degree in economics from Vanderbilt University in Nashville, TN, and a Bachelor of Arts degree in economics from the American University in Washington DC.

A Master of Arts is a person who was admitted to a type of master's degree awarded by universities in many countries, and the degree is also named Master of Arts in colloquial speech. The degree is usually contrasted with the Master of Science. Those admitted to the degree typically study linguistics, history, communication studies, diplomacy, public administration, political science, or other subjects within the scope of the humanities and social sciences; however, different universities have different conventions and may also offer the degree for fields typically considered within the natural sciences and mathematics. The degree can be conferred in respect of completing courses and passing examinations, research, or a combination of the two.

Vanderbilt University Private research university in Nashville, Tennessee, United States

Vanderbilt University is a private research university in Nashville, Tennessee. Founded in 1873, it was named in honor of New York shipping and rail magnate Cornelius Vanderbilt, who provided the school its initial $1-million endowment despite having never been to the South. Vanderbilt hoped that his gift and the greater work of the university would help to heal the sectional wounds inflicted by the Civil War.

Public debate

As an economist at the OECD, Thorgeirsson was the co-author of several Economic Surveys for Finland and Norway, respectively, wherein he developed fiscal and monetary policy advice for these countries. In his capacity as chief economist for the Federation of Icelandic Industries in 2001–2004, Thorgeirsson was a participant in the debate in Iceland concerning membership in the European Union. [4] During this time Thorgeirsson emphasised the advantages of the euro [5] while warning about potential problems with the króna especially if monetary policy became restrictive. [6] [7] He advised the examination of other ways to adopt the euro if EU membership was a sticking point. [8] He said the challenge for economic policy with a single European currency was overstated due to normal adjustment in a market economy. [9] He warned against calls for a multi-currency system and advised of the benefits of the euro for financial stability. [10] He presented an estimate of the potential benefit of EU membership for Iceland [11] and suggested that small states benefited more from EU membership. [12] In 2003, while calling for restraint in fiscal policy, bank lending and private sector decisions, Thorgeirsson warned of an exchange rate rise and subsequent collapse of the króna following the expected high interest rate policy path of the Central Bank during a FDI-led boom. [13] At the same time, he suggested a moderate monetary policy path be considered (where domestic interest rates do not devitate too much from international rates). [14] In May 2004, the central bank began to raise its policy interest rates from 5.3%, and by December 2007 it stood at 13.75%. Over this period, significant inflows of foreign capital took place, the exchange rate appreciated, bank lending surged and debt levels rose. [15] The Icelandic króna and the oversized banking system collapsed in the Autumn of 2008 when global financial markets seized up. While serving as director-general in the Ministry of Finance, Thorgeirsson suggested that the efficacy of fiscal policy was underrated in the upswing while that of monetary policy was overrated. [16] More recently, while at the Central Bank, he has written about institutional reform in financial surveillance, with a focus on macroprudential policy. He has also performed research into the policy responses to the Icelandic banking collapse, finding that the government selected the optimal path to emerge from the crisis. [17]

European Union Economic and political union of European states

The European Union (EU) is a political and economic union of 28 member states that are located primarily in Europe. It has an area of 4,475,757 km2 (1,728,099 sq mi) and an estimated population of about 513 million. The EU has developed an internal single market through a standardised system of laws that apply in all member states in those matters, and only those matters, where members have agreed to act as one. EU policies aim to ensure the free movement of people, goods, services and capital within the internal market, enact legislation in justice and home affairs and maintain common policies on trade, agriculture, fisheries and regional development. For travel within the Schengen Area, passport controls have been abolished. A monetary union was established in 1999 and came into full force in 2002 and is composed of 19 EU member states which use the euro currency.

Icelandic króna currency

The króna is the currency of Iceland. Iceland is the second smallest country by population, after the Seychelles, to have its own currency and monetary policy.


Már Guðmundsson is an Icelandic economist and policy maker. Since July 2009, he is the Governor of the Central Bank of Iceland.

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Swedish krona Currency of Sweden

The krona is the official currency of Sweden. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it but, especially in the past, it sometimes preceded the value. In English, the currency is sometimes referred to as the Swedish crown, as krona literally means "crown" in Swedish. The Swedish krona was the ninth-most traded currency in the world by value in April 2016.

Eurozone Area in which the euro is the official currency

The eurozone, officially called the euro area, is a monetary union of 19 of the 28 European Union (EU) member states which have adopted the euro (€) as their common currency and sole legal tender. The monetary authority of the eurozone is the Eurosystem. The other nine members of the European Union continue to use their own national currencies, although most of them are obliged to adopt the euro in the future.

The monetary policy of Sweden is decided by Sveriges Riksbank, the central bank of Sweden. The monetary policy is instrumental in determining how the Swedish currency is valued.

Scandinavian Monetary Union

The Scandinavian Monetary Union was a monetary union formed by Denmark and the Swedish part of the Union between Sweden and Norway on 5 May 1873, by fixing their currencies against gold at par to each other. After the dissolution of the Swedish-Norwegian union, in 1905, Norway continued to be a part of this monetary union. The union ended with the outbreak of World War I.

European Exchange Rate Mechanism European system to reduce exchange rate variability prior to the Euro

The European Exchange Rate Mechanism (ERM) was a system introduced by the European Economic Community on 13 March 1979, as part of the European Monetary System (EMS), to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of a single currency, the euro, which took place on 1 January 1999.

Currency board

A currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the exchange rate target.

Bank of Latvia central bank

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Currency union two or more states sharing the same currency without them having any further integration

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Sweden and the euro

Sweden does not currently use the euro as its currency and has no plans to replace the krona in the near future. Sweden's Treaty of Accession of 1994 made it subject to the Treaty of Maastricht, which obliges states to join the eurozone once they meet the necessary conditions. Sweden maintains that joining the ERM II is voluntary, and has chosen to remain outside pending public approval by a referendum, thereby intentionally avoiding the fulfilment of the adoption requirements.

History of the euro

The euro came into existence on 1 January 1999, although it had been a goal of the European Union (EU) and its predecessors since the 1960s. After tough negotiations, particularly due to opposition from the United Kingdom, the Maastricht Treaty entered into force in 1993 with the goal of creating an economic and monetary union by 1999 for all EU states except the UK and Denmark.

United Kingdom and the euro

The United Kingdom has never sought to adopt the euro as its official currency for the duration of its membership of the European Union (EU), and secured an opt-out at the euro's creation via the Maastricht Treaty in 1992. Polls have shown that the majority of British people have been against adopting the euro, and in a June 2016 referendum the UK voted to withdraw from the EU which would virtually eliminate the chance of any future adoption. Despite never being a member of the eurozone, the currency is used in the UK's Cypriot territories and as a secondary currency in Gibraltar; furthermore, London is home to the majority of the euro's clearing houses.

Enlargement of the eurozone

The enlargement of the eurozone is an ongoing process within the European Union (EU). All member states of the European Union, except Denmark and the United Kingdom which negotiated opt-outs from the provisions, are obliged to adopt the euro as their sole currency once they meet the criteria, which include: complying with the debt and deficit criteria outlined by the Stability and Growth Pact, keeping inflation and long-term governmental interest rates below certain reference values, stabilising their currency's exchange rate versus the euro by participating in the European Exchange Rate Mechanism, and ensuring that their national laws comply with the ECB statute, ESCB statute and articles 130+131 of the Treaty on the Functioning of the European Union. The obligation for EU member states to adopt the euro was first outlined by article 109.1j of the Maastricht Treaty of 1992, which became binding on all new member states by the terms of their treaties of accession.

2008–2011 Icelandic financial crisis

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  1. "Appointed Director-General in Ministry of Finance" (in Icelandic). Morgunblaðið. November 10, 2004. Retrieved January 12, 2012.
  2. "The role of central banks in financial supervision". January 13, 2011. Central bank of Iceland. Retrieved January 12, 2012.Check date values in: |date= (help)
  3. "Applicants for Governor of the Central Bank (in Icelandic). Web page of Prime Minister's Office" (PDF). June 24, 2009. Retrieved January 12, 2012.
  4. "Small currency exposed to volatility" (in Icelandic). Morgunblaðið. November 9, 2001. Retrieved January 12, 2012.
  5. "Why the euro instead of the króna?" (in Icelandic). Morgunblaðið. May 17, 2001. Retrieved January 12, 2012.
  6. "What is the cost of the Icelandic króna? Annual meeting of the Tourism Association" (in Icelandic). April 2, 2003. Retrieved January 12, 2012.
  7. "Billions in costs because of the króna" (in Icelandic). Morgunblaðið. April 3, 2003. Retrieved January 12, 2012.
  8. "Euro without EU membership?" (in Icelandic). Morgunblaðið. June 20, 2001. Retrieved January 12, 2012.
  9. Economic adjustment with the euro, Icelandic Industry. July 2002 (in Icelandic)] Archived April 29, 2009, at the Wayback Machine
  10. "A country without a legal tender?" (in Icelandic). Morgunblaðið. January 27, 2004. Retrieved January 12, 2012.
  11. "The Benefit of EU membership, editorial, Icelandic Industry" (PDF) (in Icelandic). June 2002. Retrieved January 12, 2012.
  12. Smaller states benefit the most from EU membership, Icelandic Industry April–May 2003 (in Icelandic) Archived October 29, 2007, at the Wayback Machine
  13. "Danger of High Interest Rates, editorial Icelandic Industry" (in Icelandic). December 2003. Retrieved January 12, 2012.
  14. "Morning news, Icelandic Broadcasting Service". December 3, 2004. Retrieved January 12, 2012.
  15. "Box 5: Issues of economic management during the expansion, Icelandic Economy – Autumn 2009. Ministry of Finance" (PDF). Retrieved January 12, 2012.
  16. "The Challenges of Globalisation for Small Open Economies with Independent Currencies, Reykjavík, May 31 – June 1, 2007". June 1, 2007. Retrieved January 12, 2012.
  17. "Selected the best path after the collapse (in Icelandic)". February 8, 2013. Retrieved May 21, 2013.
  18. "2010/5 Contagion and Spillovers: New Insights from the Crisis". February 12, 2010. Retrieved January 12, 2012.
  22. "Maximum likelihood estimation of cointegration in exchange rate models for seven inflationary OECD countries. Interest rate parity and foreign exchange risk premia in the ERM". Retrieved January 12, 2012.