“Capital controls are expected to remain in place in Iceland until 2015, according to the country’s central bank.  The restrictions have had a profound effect on the asset allocation of Icelandic pension funds, leaving them only limited room to manoeuvre, as they are unable to make new investments in assets denominated in foreign currencies.  As a result, the asset allocation of Icelandic pension funds today largely consists of government guaranteed paper and bank deposits.  The central bank had introduced measures to temporarily restrict currency outflows following the country’s banking crisis in 2008.”

http://www.ipe.com/icelandic-capital-controls-to-remain-until-2015-central-bank/40226.fullarticle

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“U.S. hedge funds aren’t the only ones trying to exit Iceland.  Its own citizens may follow if the government doesn’t show it can lift capital controls in place since 2008 without triggering a currency sell-off, according to Iceland’s biggest insurance firm.  Iceland has yet to test the staying power of its economic recovery. Capital controls, imposed at the end of 2008 after the island’s three biggest banks defaulted on $85 billion, have so far stopped offshore investors selling $7.2 billion in assets, equivalent to half the nation’s gross domestic product.  Hedge funds bought claims on the banks’ assets at prices well below face value. Five years later they’re still waiting to cash in.”

http://www.bloomberg.com/news/2014-02-28/iceland-seen-threatened-by-capital-flight-from-its-own-citizens.html

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