(Adds analyst comment, background)
By Ragnhildur Sigurdardottir
REYKJAVIK Aug 15 Iceland's Ministry of Finance said on Friday it had renewed Mar Gudmundsson's mandate to lead the Nordic country's central bank as governor for another five years.
Gudmundsson will play a key role in removing capital controls put in place after the country's top banks collapsed under a mountain of debt in 2008. He will also be involved in deciding how to handle the estates of the old banks.
"I think this is positive news for the markets because the central bank has been making good headway in terms of their credibility - getting inflation under control and facilitating more stability in the foreign exchange market," said Islandsbanki senior economist Jon Bentsson.
"Changing the governor at this juncture with the lifting of capital controls nearing us in time would probably have sent a confusing message to both domestic and international markets." (Additional reporting by Mia Shanley, writing by Sven Nordenstam; Editing by Larry King)