Iceland publishes Darling conversation
The Icelandic government has posted a transcript of the conservation between Alistair Darling and Icelandic minister of finance Arni Mathiesen. The conversation led the chancellor to step in and freeze the assets of Icelandic banks.
On October 8th Mr Darling used anti-terror laws to freeze Icelandic assets and told the BBC: "The Icelandic government, believe it or not, have told me yesterday they have no intention of honouring their obligations.
"I have decided in these exceptional circumstances that we will stand behind those depositors so they get their money back."
The Icelandic government has now released the transcript of the conversation, available here.
The transcript reveals Mathiesen admitting there was not enough cash in the depositor scheme to protect savers, but the Icelandic government was working to solve the problem.
It now seems the UK moves to stem the Iceland crisis may have been based on a misunderstanding between the two ministers.
In it Mr Mathiesen states: "I cannot visibly state or guarantee [UK savers] now but we are certainly working to solve this issue."
When asked about the insurance fund to cover savers, the Icelandic finance minster said: "They have some money, but as is with most of these funds, it is very limited compared to the exposure."
Mr Darling then asked: "It is quite possible that there is not enough money in that fund. Is that right?"
Mr Mathiesen: "Well, yes, that is quite possible."
The chancellor replied: "Well, that is a terrible position to be in."
He later added: "It really is a very, very difficult situation where people thought they were covered and then they discover the insurance fund has got no money in it."
Alistair Darling has meanwhile denied Icelandic claims he overegged the weakness of Iceland's bank and how much they would reimburse UK savers
"I was in no doubt from the conversation I had with the Icelandic finance minister. that the Icelandic government was not going to be able to help British depositors," the chancellor told Channel 4 News
"They still haven't safeguarded the position of British depositors."
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