Burden sharing. As regards burden sharing, the IAG state in Section 5.2 the general principle that banks ought to bear the losses associated with impaired assets to the maximum extent. That implies first that banks should bear the difference between the nominal value and the real economic value of the impaired assets. As the Icelandic government has not established the real economic value of the mortgages loan pools, it is difficult to assess to which extent the banks bears the difference between the nominal value and the real economic value of the impaired assets. Given that the Authority has doubts as regards the correct valuation of the assets prior to government intervention, there are also doubts as regards the necessary degree of burden sharing included in the Mortgage Loan Scheme.
