Icelanders reject compensation for the collapse of Icesave bank

Icelanders reject a plan to pay €3.8 billion to the United Kingdom and the Netherlands as compensation for the collapse of Icesave bank. The referendum failed to pass, with 93% voting against.

The referendum was held to approve the terms of a state guarantee on the debts of the Depositors’ and Investors’ Guarantee Fund (Tryggingarsjóður innstæðueigenda og fjárfesta), in particular a €3.8 billion loan from the governments of the United Kingdom and the Netherlands to cover deposit insurance obligations in those countries.

The referendum was held under article 26 of the Icelandic Constitution after President Ólafur Ragnar Grímsson refused to counter-sign the corresponding Act of Parliament (known as the second Icesave bill) into law on 5 January 2010.

The referendum was the first to be held in Iceland since independence in 1944, and required special legislation. The Althing (Iceland’s parliament) approved a motion on 8 January 2010 which called for the referendum to be held by 6 March at the latest. The motion passed by 49–0 with 14 abstentions. The date of the referendum was later set for 6 March.

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