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Were the government aware of problems in Iceland back in April?

As the situation in Iceland appears to be coming a little clearer there have been suggestions that the UK government were concerned about the financial system in the country as long ago as April this year. However, despite rumoured concerns within government and the Bank of England no warning was passed to local authorities, business or the financial world and taxpayer's funds were readily deposited with Icelandic banks.

Surely if a government which had concerns, no matter how small they were, about the financial strength of a country which was holding in excess of £1 billion of UK funds they should have made an effort to reduce the country's exposure as a whole. We are now in the situation whereby the Icelandic authorities are unable to honour deposits with their banks and have literally had to go cap hand to a whole host of countries and organisations around the world.

While there are hopes that some UK deposits will be honoured, in a short-term there are still literally hundreds of millions of pounds left unprotected and possibly lost forever. Whether the credit agencies or even government advisers have serious questions to answer is something which will no doubt come out over the coming months.

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