Iceland central bank chief refuses to quit

Icelandic central bank Governor David Oddsson, whose party steered the policies that resulted in the collapse of the country's financial system, is rejecting calls for him to quit.

Prime Minister Johanna Sigurdardottir wrote to the bank's three Governors, telling them to quit pending a law allowing the coalition to fire them.

Sigurdardottir's alliance of Social Democrats and Left Greens took office at the beginning of this month.

"A letter of this kind, with little-disguised threats to officials is unheard of," Oddsson said.

It flies in the face of "laws which are to guarantee the independence of central banks and prevent a political attack on the central bank board of Governors".

Oddsson, 61, was Prime Minister between 1991 and 2004 and a member of ousted Premier Geir Haarde's Independence Party, which spearheaded the liberalisation of the banks in the 1990s.

The Governor said of the promise of "purges" from specific posts that it was "incredible that it is directed at officials in Iceland in the beginning of the 21st century".