Reykjavik/Stockholm - Iceland was reported Monday to be inching closer to secure support for a rescue package from the International Monetary Fund (IMF) and several central banks.

New York - Austria, Iceland, Iran, Japan, Mexico, Turkey, and Uganda are competing for five seats on the UN Security Council in an election on Friday in the UN General Assembly.

The five council seats that will be vacated on December 31 are now occupied by Belgium, Indonesia, Italy, Panama and South Africa. Those countries are ending their two-year terms in the body that has authority on issues of peace and security around the world.

Reykjavik  - The central bank of Iceland on Thursday said it would guarantee payments in an effort to restore confidence in the Icelandic banking system amid a global credit squeeze that has disrupted payments to and from the North Atlantic nation.

The central bank, Sedlabanki, said it "guarantees" that the funds "will reach the ultimate beneficiaries' accounts."

Last week, the government in Reykjavik nationalized the country's three largest banks, which have run up liabilities at least five times that of Iceland's gross national product in recent years.

Oslo, Reykjavik  - Iceland should consider replacing its currency with that of neighbouring Norway, an Icelandic economics professor suggested in an interview published Wednesday.

The move was necessary since confidence in the Icelandic central bank has withered in the wake of the recent financial turmoil, Professor Thorolfur Matthiasson of the economics faculty at the University of Iceland told the Bergens Tidende newspaper.

"To get room to maneuver we need a plan A and a plan B," Matthiasson said, noting that one option was to consider joining the European Union and adopting the joint European currency, the euro.

"In the short-term, it may be more realistic to pursue a monetary union with Norway," he added.

Reykjavik - Iceland's central bank lowered its key interest rate on Wednesday from 15.5 to 12 per cent, bending to increasing public pressure for a cut to ease the North Atlantic island's financial woes.

The central bank, or Sedlabanki, on Tuesday drew on swap facilities with Denmark and Norway, borrowing some 200 million euros (273 million dollars) from each.

Meanwhile negotiations with government officials in Moscow are ongoing over a Russian loan to Iceland of some 400 billion euros. Following the nationalization of Iceland's three largest banks last week, lack of funds to industry and commerce has become a pressing issue.