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Up Against The Wall

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What is mostly amazing is that it took so long, but the head of Iceland's central bank, having refused to fall on his sword, is expected to be shown the door tomorrow. The United States is somewhat rare in isolating the head of its Central Bank from political removal- though I suspect if Congress really wanted to remove a Chairman badly enough, it could be done. In this case, however, Oddsson (the Central Banker in question) may be something less than culpable.

Iceland's parliament passed a bill Thursday that will oust the country's central-bank chief, David Oddsson, who is widely blamed for a banking-system collapse that has wreaked havoc on the island's economy.
Mr. Oddsson, Iceland's prime minister from 1991 to 2004 and central-bank chief since 2005, had refused to quit, despite appeals from new prime minister Johanna Sigurdardottir and regular public protests demanding that he go.

Ironically, and as the Journal article points out, much of the central bank's decision making power was legislated away some years ago, but when someone has to go, they have to go. It's cold outside in Iceland nowadays too.
Given Oddsson's claim that he warned repeatedly that banks were severely overextended, it is probably worth reflecting on the wisdom of introducing the whim of political accountability to central banks in light of Iceland's case.
Iceland Parliament to Oust Central Bank Chief [The Wall Street Journal]


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