Reykjavik/Stockholm - The central bank of Iceland Friday said it has signed a "bilateral swap facility" with the central banks of Sweden, Norway and Denmark. The agreements allow Iceland access to euro in exchange for its krona, according to joint statements from the Nordic central banks.
The Icelandic central bank said it was "a precautionary measure" and each central bank would offer up to 500 million euros (773 million dollars).
Iceland's economy has sputtered and in April the central bank raised its interest rate to 15.5 per cent in an attempt to tackle soaring inflation.
The North Atlantic nation's currency has slumped and made imported goods more costly.
"In times of uncertainty and turmoil the central banks have a responsibility to cooperate to attain their overall objectives," Swedish central bank governor Stefan Ingves said in a statement.
In Oslo, Norwegian central bank governor Svein Gjedrem said the deal was aimed at helping "Icelandic authorities in their efforts to stabilize economic conditions in Iceland."
