Iceland confirms that Swedish model for bank solvency crisis works

According to a Guardian article, Fitch has raised the credit rating on Iceland so that it is now investment grade again.  The rating agency sees Iceland as relatively unaffected by the European sovereign debt crisis and unlikely to slip back into recession.

As regular readers know, Iceland adopted the Swedish model for dealing with a bank solvency crisis.  Specifically, Iceland forced its banks to recognizes the losses on the financial excesses.

As a result, the real economy has been able to recover to such an extent that Iceland has become investment grade again.