THE ICELANDIC BANKING CRISIS OF 2008-2011 A SHORT TRAILER TO THE ICELANDIC CRISIS The Icelandic Banking Crisis was one of the most surprising and dramatic events of the 2008 international financial and economic crisis. The collapse of the three largest banks of the country (Kaupthing, Landsbanki, and Glitnir) went onto severely undermine the nation’s economy. Not only it led to inflation followed by severe depression in the economy, but it also caused much political unrest in the economy as well. In accordance with the size of the economy, this crisis was the third-worst financial crisis in a country after the US and the Lehman Brothers. This issue rose to prominence the first time when the then Prime Minister, Minister Geir Haarde officially announced the country’s bankruptcy in October 2008. The collapse of the three banks was followed by their difficulties in refinancing the short-term debts given out and were forced to run only on the deposits in the UK and in the Netherlands.