The Icelandic government refuses to negotiate with the creditors of the three large banks that defaulted in the financial crisis in 2008. The government is waiting for the creditors and the winding up boards to reach an agreement. The government intends to implement a super tax on the defaulted banks to pressure them.
While nothing happens the creditors of the three banks do not get any payments from the estates and it is also impossible to lift the capital controls. So both parties would benefit from a successful agreement. This has been described as a staring contest.
Two of the creditor's advisers complained to Reuters that the Icelandic government was unwilling to negotiate. But Sigmundur David Gunnlaugsson, prime minister of Iceland, said to Bloomberg that the government was not involved in this matter. The matter is about private parties trying to negotiate a debt settlement. "We are not negotiating directly with the creditors and we wont. That was never the plan."
The government believes that time is on their side, because a bank tax has been implemented on the defaulted banks that is supposed to generate 28.3 bn ISK in tax revenue annually. This is around 181 million EUR at today's exchange rate, or around 1.65% of GDP. The legality of this taxation has been questioned and it is considered likely that the creditors will sue the government because of the tax.