The Return of Trust?: Institutions and the Public after the Icelandic Financial Crisis

Trust is the fundamental facilitator between actors in society, yet the past decade has seen the public openly question through demonstrations and elections whether business and political institutions deserve the trust society has placed in them—or whether the common person has been abandoned in favour of organisations and systems that are ‘too big to fail’. The tenth anniversary of the crisis that shook financial markets in the early years of this century provides a chance to reflect on institutions’ efforts to regain the trust lost in that debacle. It is particularly instructive to examine the steps that financial and governmental institutions have taken in one of the hardest-hit economies, Iceland. Those who witnessed the crisis and its aftermath know the wrenching effects it had on society, underscored by scepticism toward political and economic institutions. As the crisis spread almost worldwide, so too did the public’s disenchantment. Since Iceland was one of the first societies affected, it has had the most time to work on and chart its recovery. This collection addresses the broad theme of how institutions in the small, close-knit Icelandic society have gone about trying to recapture other institutions’ and the public’s trust. Insights from these studies expand our understanding of how institutions try to rebuild their relationships with communities in the face of political and economic change in fractured Western societies.

Table of Contents:
Foreword; Guðni Th. Jóhannesson, President of the Republic of Iceland Introduction; Throstur Olaf Sigurjonsson, David Schwarzkopf and Murray Bryant  Part I. The situation Chapter 1. Restoring confidence in the aftermath of Iceland’s financial crisis; Gylfi Zoega  Chapter 2. Discursive control using emotion and economics during a financial crisis; David Schwarzkopf and Throstur Olaf Sigurjonsson Chapter 3. Public trust in institutions in pre- and post-crisis Iceland (I): Take the lift down, but use the stairs up; Guðrún Johnsen and Sigurbjörg Sigurgeirsdóttir Chapter 4. Trust: Some questions from a layperson; Einar Már Guðmundsson Part II. Responses Chapter 5. ‘Not just crying about the money’: Iceland and globalisation during boom and crisis; Kristín Loftsdóttir and Már Wolfgang Mixa Chapter 6. Restoring trust in Iceland: Iceland’s IMF programme; Friðrik Mar Baldursson and Richard Portes Chapter 7. A question of trust: The story of Reykjavík Energy; Guðrún Erla Jónsdóttir Chapter 8. Public trust in institutions in pre- and post-crisis Iceland (II): Institutionalised mistrust; Sigurbjörg Sigurgeirsdóttir and Guðrún Johnsen  Part III. Moving forward  Chapter 9. Have Icelanders learned their lesson? The investigation of the Icelandic collapse and its aftermath; Vilhjálmur Árnason  Chapter 10. Trust and financial services: The impact of increasing digitalisation and the financial crisis; Andreas Oehler and Stefan Wendt  Chapter 11. Post-crisis regulation and supervision of Icelandic banks; Jón Thór Sturluson Chapter 12. Restoring trust through improved corporate governance and adherence to gender quotas; Auður Arna Arnardóttir and Throstur Olaf Sigurjonsson Chapter 13. Governance mechanisms post-crisis; Murray Bryant, Throstur Olaf Sigurjonsson and Már Wolfgang Mixa  About the Authors

Review :
While Reykjavik was booming in the fall of 2007-Hummers, SUVs, packed coffeehouses, burgeoning restaurants, ad nauseum-12 months later revealed a terrible transformation: no credit at the grocery store, unstable currencies, plummeting savings. Three co-editors-Icelander, Canadian, and American-know whereof they speak, having experienced both crash and aftermath. In addition, they watched friends, colleagues, students, and other citizens share their anger, frustration, distrust, disbelief, doubt, personal isolation, and loss of national identity. Their contributors to this volume are not only some of the storytellers but were active participants in Iceland recover from a nearly complete financial collapse. While the small nation has been called an economic phoenix, the questions revolve around trust? Many contributors agree: trust remains elusive and even once restored, it is neither stable nor universal and so building trust is always a work in progress.