Iceland's prime minister, Sigmundur Gunnlaugsson, resigned Tuesday after leaks, from Panama law firm Mossack Fonseca, showed he and his wife, owned an offshore company, Wintris, in which he is accused of concealing millions of dollars worth of family assets.
Gunnlaugsson resigned just hours after the country's president, Olafur Ragnar Grimsson, declined the prime minister's request for a dissolution of parliament in the face of a looming no-confidence vote and protests.
"I was not ready to agree to that request (for dissolving parliament) until I had a discussion with the leaders of other parties on their stand," Grimsson told reporters.
"I do not think it is normal that the prime minister alone ... should be given the authority to dissolve the parliament without the majority of the parliament being satisfied with that decision."
Gunnlaugsson refused to resign on Monday after coming under increasing pressure from within his governing coalition and the electorate.
He took to Facebook on Tuesday to outline his position.
"I told the leader of the Independence Party that if the party's parliamentarians think they cannot support the government in completing joint tasks, I would dissolve parliament and call a general election," he wrote.
A government spokesman has said the claims against Iceland's collapsed banks held by the firm owned by the prime minister's wife, in which he also temporarily held a stake, totaled more than 500 million Icelandic crowns, or US$4.1 million.