* Iceland names Mar Gudmundsson as new central bank chief
* Senior BIS official, former central bank chief economist
* To take over as Iceland continues to face tough times (Adds quotes, background)
STOCKHOLM, June 26 (Reuters) - Iceland on Friday named a senior official at the Bank for International Settlements to be its central bank chief, as the crisis-hit nation faces fresh challenges.
Iceland, which swept away the old leadership of the bank in February, is in the grip of what is expected to be its worst recession after the collapse of its oversized commercial banks and of its currency last October.
The central bank has made a string of rate cuts in recent months, and last year imposed capital controls to stop the currency collapse.
The bank said the government had appointed Mar Gudmundsson, deputy head of the BIS monetary and economic department, as new governor for a term of five years.
"The interim Governor of the Central Bank, Svein Harald Oygard, will continue in that position until Mar Gudmundsson takes over on August 20," the central bank said.
Oygard, a Norwegian, was appointed in February after the government dismissed the previous head of the central bank, who had been widely blamed for doing little to prevent the crisis.
The central bank also said the government appointed Arnor Sighvatsson as deputy governor for four years from July 1. He had already held the post on an interim basis.
Gudmundsson is one of Iceland's most senior financial sector officials and a former domestic central bank veteran.
The bank said Gudmundsson had been in his role at the BIS since 2004. He earlier worked for about 20 years at the central bank of Iceland, including a decade as chief economist. He was economic adviser to the minister of finance from 1988-1991.
He is set to come to office after the government forecast the economy will contract at a rate of more than 10 percent this year while the unemployment rate, which stood at virtually zero ahead of the crisis, is seen climbing to nearly as much amid mounting corporate bankruptcies.
The financial collapse left Iceland dependent on a multibillion-dollar bailout tailored by the International Monetary Fund and painful budget cuts are in store to slash the surging government deficits. (Editing by James Dalgleish)