http://news.bbcnewsd73hkzno2ini43t4gblxvycyac5aw4gnv7t2rccijh7745uqd.onion/2/hi/europe/7852275.stm
Both households and firms had borrowed extensively in foreign currency and with the collapse of the exchange rate were seeing the value of their debt explode. Iceland imports most goods, so when the exchange rate collapsed, the cost of essentials shot up.