> Or perhaps the people investing in the Icelandic banks were not investing? Was this some sort of special investment where you get a better rate than the regio

> Or perhaps the people investing in the Icelandic banks were not investing? Was this some sort of special investment where you get a better rate than the regional banks without any sort of risk? Yes, in fact, that's pretty much it. The infamous Icesave accounts were savings accounts, not investments in the way you'd normally think of them. They were savings accounts that paid higher interest rates than just about anyone else in town (about 6% in the UK), but they still had the equivalent of FDIC protections (for the American readers out there). The problem is that the Icelandic equivalent to the FDIC had nowhere near enough money to actually pay back all the guaranteed deposits that were lost, so they said, "We'll pay the Icelanders back first and then....hey look! A squirrel!" The UK and the Netherlands stepped in to cover the losses of their own citizens, but they also took Iceland to the European Court for failing to honor the required guarantees. The importance was somewhat lessened as the assets of the failed Landsbanki bank that had offered these accounts could cover quite a lot of the debt owed to the UK and the Dutch, but yeah, Iceland did sort of screw them. Not that they had much choice, but there you go.