Indeed they greatly outgrew the local economy (which after all is very small, with a national population of less than half a million persons) and were heavily involved in the financing of international investment ventures of some of their Iceland-based customers.
Since uncertainty about future inflation affects households’ purchase decision, price stability is described as an environment where economic agents need not take into account uncertainty about future inflation in their decision-making4. 2  Bernanke, B. S. (2007); “Inflation Expectations and Inflation Forecasting”, Speech delivered at the Monetary Economics Workshop of the National Bureau of Economic Research Summer Institute, Cambridge, Massachusetts, July 10, 2007.