Iceland’s new government is working on a plan to restructure billions of dollars of its bonds held by foreign investors as part of a drive to restore confidence in its shattered economy.

Foreign investors own up to ISK400bn ($3.6bn, €2.8bn, £2.5bn) in krona-denominated bonds which the central bank fears could be dumped once capital controls imposed during its banking crisis are removed.

The Icelandic central bank has warned a huge outflow of currency would seriously destabilise the krona and these fears are one of the main reasons the capital controls are still in place.

From the Financial Times

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