Jun 1, 2011

How to evade capital controls in Iceland?

You just have to buy a Rolex and sell it abroad at a discount. Gylfason explains on VoxEU:
Under extreme duress after the crash, Iceland also became the first industrial country in more than 30 years to call on the IMF for help... in a 180 degree turn from its handling of the East Asian crisis of 1997-1998, the IMF allowed Iceland to impose strict controls on capital movements, inward as well as outward... The controls were originally envisaged to be in effect for 2-3 years... The reality has turned out differently. The Icelandic authorities have recently sought authority to keep the controls in place until 2015. The Rolex index – the number of high-end watches sold per person – is high in Iceland not necessarily because the economy’s top echelon is doing so well but rather because ordinary people have no access to foreign exchange beyond their monthly allotment of €2,150 for foreign travel plus their modest credit card limits, so they are rumoured to buy expensive watches at home for resale at a discount abroad. Welcome back to the 1950s.

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