Traditionally, the Icelandic economy was more regulated and politicised than economies generally in most other Western countries. Economic management was more predicated on discretion than rules, with tight connections between private sector firms and political parties. The bank operating system was politicised with usage of capital predicated on nepotism and political connections.
Government control over the economy has reduced as time passes, with key events being the joining of the European Free Trade Association and the European Economic Area in the first 1990s. The latter meant that Iceland got extensive usage of European markets and adopted European regulations.