Iceland’s early repayment of a significant part of the total outstanding loans of €3.4 billion (ISK567 billion at current exchange rates), as announced on 15 March, smoothes Iceland’s external payment profile and generates interest savings for the government and the central bank (of approximately ISK10 billion or 7% of interest payments due on the loans). In fact, a key aim of this transaction was the reduction of the significant net interest expense associated with holding large amounts of “borrowed” reserves against short- to medium-term debt maturities.[…]