Iceland president: Letting banks fail helped recovery

Iceland president's toughest decision
Iceland president's toughest decision

    JUST WATCHED

    Iceland president's toughest decision

MUST WATCH

Iceland president's toughest decision 04:16

Story highlights

  • Iceland is pinning its hopes on the Arctic region as the eurozone remains in financial crisis
  • The president says he would veto a parliamentary decision to seek EU membership
  • Iceland allowed its banks to fail during its crisis, and the economy has since recovered

Iceland is pinning its hopes on the Arctic as Europe continues to suffer from high unemployment and faltering growth.

Iceland's president Olafur Ragnar Grimsson told CNN's Richard Quest: "The Arctic region is gradually becoming one of the most important playing grounds in the 21st century world economy."

His comments come four years after the country let its debt-ridden banks fail, and as the country's growth looks set to far outpace the eurozone. Grimsson said the decision not to save the banks was "the most difficult I ever had to make," but maintained it was the right one.

"Allowing the banks to fail is one of the fundamental reasons Iceland is now in a strong recovery with respect to other European countries," he said.

Now, according to Grimsson, "Iceland is better placed to benefit by maintaining our present position, rather than to let the EU speak on our behalf."

Fishing lifts Iceland's economy
Fishing lifts Iceland's economy

    JUST WATCHED

    Fishing lifts Iceland's economy

MUST WATCH

Fishing lifts Iceland's economy 03:34

Iceland fishing for deal on EU quotas

Iceland president's toughest decision
Iceland president's toughest decision

    JUST WATCHED

    Iceland president's toughest decision

MUST WATCH

Iceland president's toughest decision 04:16

The 69-year-old president pointed to Norway and Greenland -- two other Arctic economies and non-European Union members -- as role models.

He said he would not hesitate to veto a parliamentary decision to seek EU membership, a promise he told CNN he had based five successful presidential runs on.

However, Grimsson said he was not sure whether Iceland's strategy with its banks could have been replicated by other countries with similar problems, such as Ireland.

"Being part of the eurozone, they couldn't devalue their currency. But they could have adopted our policy with respect to the banks," he said.

The Icelandic krona fell sharply as a result of the financial collapse, helping the country recover by increasing demand for exports.

"There are still scars," Grimsson said, "but on the whole, the will of the Icelandic people has enabled us to recover and move confidently towards the future."

      Marketplace Europe

    • spc marketplace europe latvia valdis dombrovskis_00021207.jpg

      Latvia's economic prospects

      CNN's Nina Dos Santos visits Latvia to speak to the country's outgoing Prime Minister and the prospects for the eurozone's 18th member.
    • spc marketplace europe malta immigration africa_00002118.jpg

      Asylum seekers in Malta

      Malta is the gateway to Europe and on the frontline of the immigration flows. Isa Soares reports from a detention center on the Mediterranean island.
    • spc marketplace europe malta immigration vox pops_00001419.jpg

      Maltese concerned over migrants

      CNN's Isa Soares speaks with people on the streets of Valletta who say their country can't cope with more migrants from Africa and the Middle East.
    • spc marketplace europe malta george vella_00032005.jpg

      Malta's migrant struggle

      Malta cannot afford to continue supporting migrants from war-torn countries in its over-crowded detention camps, the country's foreign minister has told CNN.
    • spc marketplace europe 2013 what went wrong_00020426.jpg

      What went wrong in 2013?

      Slow recoveries, bailouts, and youth unemployment. Richard Quest speaks to Europe's top CEOs about the issues of 2013.
    • spc marketplace europe 2013 defining moments bob parker intv_00010826.jpg

      2013: The year of tapering

      CNN's Richard Quest speaks to economist Bob Parker about defining moments of 2013 and about what to expect in 2014.
    • spc marketplace europe estonia energy_00000923.jpg

      Estonia's dirty energy drive

      The Baltic nation of Estonia is developing its oil shale energy reserves in a bid to become energy self-sufficient.
    • spc marketplace europe nani beccalli falco_00041005.jpg

      GE Europe exec's jobs warning

      Europe must stop being nationalistic if it wants to help a lost generation of workers, the regional boss of U.S. conglomerate General Electric says.
    • spc marketplace europe greece petros christodoulou_00002025.jpg

      Is Greece on the mend?

      Greece is on the way to economic recovery as investor faith returns to the recession-ridden eurozone nation, an executive at Greece's largest bank has told CNN.
    • spc marketplace europe euro jim cloos_00012617.jpg

      Don't blame euro, says pioneer

      One of the masterminds behind the euro says Europe would have suffered a far worse fate if the single currency had never been created.
    • spc marketplace europe maastricht eu_00002401.jpg

      The birthplace of the euro

      Nina Dos Santos visits the Dutch city where the European treaty carrying the city's name came into force 20 years ago.
    • spc marketplace europe spain working hours_00010525.jpg

      Spain may turn clocks back

      As Spain continues its drive to slash budgets and cut spending, one of the nation's favorite pastimes is under threat as ministers look for ways to boost productivity.