Iceland's response to its banking sector collapse was optimal, a working paper published by the Central Bank of Iceland has found.

The Icelandic Banking Collapse: Was the Optimal Policy Path Chosen? by Thorsteinn Thorgeirsson and Paul van den Noord tests four alternative scenarios against the baseline, in which Iceland rescued the domestic operations of banks and allowed the foreign operations to go into resolution, imposed capital controls and implemented a medium-term fiscal consolidation. The