|The Consolations of Being Small|
Why Iceland? Could it be because it decided to protect its citizens from the financial crisis of 2008, instead of the country's over-extended financial institutions that got its citizens into trouble? One reason it couldn't protect its financial institutions is that the trouble they got into was way beyond the ability of the government to solve. https://wapo.st/2JjarhP
Another possibility – Iceland feels protected by its Scandinavian friends (although Iceland declared its independence from Denmark in 1944), perhaps the way Australia and Canada feel protected by Britain.
What are the lessons of Iceland?
1. Better for the economy for the government to protect small depositors than the outsized financial sector.
2. Easier to do this when the country is so small that aggressive financial institutions can't possibly push losses onto the taxpayer. When the country is too small to build a large self-perpetuating defense establishment.