A business man walks in Reykjavik in April 2009. Iceland's central bank said on Saturday it would begin progressively lifting capital controls put in place a year ago after the global financial crisis toppled the country's banking system. Source: AFP

A business man walks in Reykjavik in April 2009. Iceland's central bank said on Saturday it would begin progressively lifting capital controls put in place a year ago after the global financial crisis toppled the country's banking system. Source: AFP

REYKJAVIK: Iceland's central bank said on Saturday it would begin progressively lifting capital controls put in place a year ago after the global financial crisis toppled the country's banking system.

The bank "has taken the first step in the sequenced removal of the capital controls by permitting inflows of foreign currency for new investments and potential outflows of foreign currency that may derive from such investments in the future," said a statement.

"Investors are authorised, without restrictions, to convert into foreign currency the sales proceeds from assets in which they invest after November 1, 2009," it said.

A business man walks in Reykjavik in April 2009. Iceland's central bank said on Saturday it would begin progressively lifting capital controls put in place a year ago after the global financial crisis toppled the country's banking system.

Capital controls were put in place on November 28 last year to stabilise the economy in the wake of the financial crisis

The central bank said in August that it had seen improvements in the country's krona currency that would "probably" enable it to lift capital controls by November.

In June, Iceland cut its key interest rate from 13 to 12 percent, returning the rate to the level it was at before the global financial crisis crushed the country's banking system.

The spectacular collapse prompted Iceland to take out a 2.1-billion-dollar (1.6-million-euro) loan from the International Monetary Fund.

Iceland's previous prosperity had been heavily based on its robust banking sector and the country consequently suffered a major macroeconomic blow when its key lending institutions were laid low by the global finance meltdown.

In October 2008, the government had to take control of the country's three leading banks amid liquidity shortages. Their collapse outraged the general public, with many jobs lost and people losing some of their savings.