Other countries, of course, haven't been so lucky. The crisis remains front page news in Greece, Italy and Spain — countries that followed a very different response from Iceland's.
Ólafur argues that his country's strength came from recognizing the problem was not just an "economic and financial challenge", but a "profound social, political, and even judicial" challenge.
After the crisis, the country held a full judicial investigation, and went against "the prevailing economic orthodoxies of the American, European and IMF model." Ólafur says that he likes to think that the IMF learned more from Iceland during this time than vice versa.
Adam Taylor / Business InsiderA key example of this approach is Iceland's refusal to pump money into failed banks. The decision was controversial at the time, but now looks increasingly wise. "I have never understood the argument — why a private bank or financial fund is somehow better for the well being and future of the economy than the industrial sector, the IT sector, the creative sector, or the manufacturing sector".
There is, of course, another aspect. A tricky situation arose when the U.K. and Holland demanded money for their citizens' depleted Icesave accounts, and Iceland refused. The incident sparked a major diplomatic scuffle, with Iceland refusing to pay out and the U.K. even using "anti-terrorism legislation" against the state.
For Ólafur, it's also a personal aspect. He was head of state, though he did not control the government — in effect his position was more like being an elected Queen of England than being Barack Obama. But constitutionally he had the right to veto government legislation — though it had never been used by his office previously.
Ólafur decided to block government legislation to pay back the U.K. Twice. Both times the legislation went to a nationwide vote, and failed.
"It was absolutely very tough indeed," Ólafur says. "Every big financial institution, both in Europe and in my own country was against me, and there were powerful forces, both in Iceland and Europe, that thought my decision was absolutely crazy."
The decision was hugely controversial, and remains a sore spot in relations. For him, it was a matter of history. "What is our primary legacy to countries and nations in modern times?" He says, "Europe is and should be more about democracy than about financial markets. Based with this choice, it was in the end, clear that I had to choose democracy."
He also blames the British for their role, specifically Gordon Brown, by whom he believes Iceland is owed an apology. Ólafur likens the situation to the Falklands war, adding it was a "great offense" that "one of the most peace-loving countries in the world, a founding member of NATO, a strong ally of Britain during the Second World War was put together with al-Qaeda and the Taliban on the official list of terrorist organizations."
Iceland essentially had no choice, Ólafur says.
"If you take the relative size of the Icelandic economy and the British economy," he explains, "and you transfer over to the British economy the sum that the British government was asking the Icelandic taxpayers to be responsible for due to the failure of this private bank, it would have been equal [...] to asking the British taxpayer to be responsible for an £800 billion bill [$1,275 billion] for a failed British bank in Spain and Italy and Greece."
