In the last few days, there has been major buzz around an idea outlined by two economists in an article in Fréttablaðið last Saturday, which revolves around Iceland unilaterally adopting a new currency – without taking a loan from the International Monetary Fund.
The article outlines how this would be done, and by the sounds of it, it seems pretty simple. The way I understand it, and put in its simplest form, it entails Iceland using its current foreign currency reserves to buy reserves of the currency it wishes to adopt, and just making the switch. We would then effectively become a part of a larger currency market, governed by the Central Bank of the state from which the currency derives.* Here in Iceland it wouldn’t even have to be such a big deal because there is a relatively small amount of currency in circulation – the majority of transactions are electronic.
Until now, all ideas have focused on propping up the krona so it can be floated [confession: I'm completely ignorant of what that means], which evidently would entail having a major foreign currency reserve, hence the need for a USD 6 billion loan from the IMF. However, the abovementioned article points out that there could very easily be a rush to change kronas into other currencies – as it no longer enjoys any trust – without a change back, which would mean that the Icelandic nation would wind up with a completely useless currency AND massive foreign debt, to boot.
Apparently the solution they are proposing has been applied before, in both Montenegro and Panama. In fact, the economists who oversaw those changes have both been interviewed by the Icelandic media in the last few days, and expressed their views that this is completely viable.
Unsurprisingly, this article has received a lot of attention here in Iceland. After all, the situation is completely insufferable here at the moment, what with the endless delays in the IMF’s approval of the rescue package [there are reports that it's being held up by British and Dutch representatives, who refuse to pass the package until the Icesave dispute is settled] and various other loan promises floating around, while nothing seems to happen. And the natives are getting restless. The Fréttablaðið editorial today compared the situation to the film Groundhog Day, where the Bill Murray character wakes up day after day to the same circumstances, as the same day keeps repeating itself. It’s kind of like that here. People have fallen into a numb sort of trance, endlessly waiting for something to happen, and nothing does. All of which may well erupt into massive rage if nothing is done – soon.
As ever, the government and the Central Bank seem completely ineffective. Apparently Barack Obama has already called together a team of economists in the US to brainstorm ways to deal with the economic crisis over there – why hasn’t our government done something similar? The ideas are out there – it is amazing how many people are coming up with brilliant, creative ideas to deal with various aspects of this mess – such as the two economists who presented the idea above. Why hasn’t the government called the best minds in the country together IN ONE ROOM and brainstormed ways to deal with the crisis, which becomes deeper with each passing day? Why do people have to send their ideas in to the newspapers and get the media buzzing before they’re even listened to? It’s completely incomprehensible.
Two of the main news/talk shows here in Iceland – Kastjós and Silfur Egils – have addressed the abovementioned idea on their programmes in the past couple of days. All economists agree that the solution is viable. The only real dilemma associated with it seems to be political – i.e. if Iceland were to unilaterally adopt the euro without the approval of the EU we might piss them off – and God knows we don’t need more enemies right now. However, we might not even have to pick the euro – hell, we could even adopt the greenback [strange how the hypothetical idea in this post - that I wrote more or less in jest a few months ago - has suddenly become dead real].
Whatever transpires, I have to say that this solution, as outlined, seems the most eminently sensible thing I’ve heard in a long time. We wouldn’t have to take this huge IMF loan, the IMF wouldn’t set their potentially damaging conditions [their rescue packages in the past have been severely criticized by many experts and could have extremely dire consequences] and we’d be rid of the króna which, I truly am sad to say, seems to have run its course.
IT’S TURNED VERY CHILLY
Here in the November darkness we now have 0°C [30F] and very cold winds. Sunrise this morning came at 9.44 and sunset this afternoon at 4.38.
* Meaning we would have no use for our own Central Bank any more. Hallelujah!
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So I was in Bónus today (the one on Laugavegur) and I am happy to tell you that they had loads of fresh coriander, reasonably priced, both locally grown and imported. Yay!
Takk Gunnhildur. I know – I bought some at Bónus last weekend (the one úti á Granda). It seems like it’s everywhere now. wOOt!
Iceland may wish to consider the Canadian Dollar as a currency. Canada has one of the strongest Banking systems in the world and is a commodity based economy. (Plus we’re kind-of neighbours.)
The US Dollar would be a very bad choice. Despite the recent run-up in the US Dollar, it cannot be sustained at the current levels as long as the US Federal Reserve continues to print money at an ever accelerating pace. Couple this with the fact that China holds over 2 Trillion of US treasuries and may utilize this to finance their own recently announced $600 Billion economic relief effort and IMO we will see a dramatically debased US dollar by early 2009.
Varstu búin að sjá þetta: http://gautieggertsson.blogcentral.is/ Kannski er þetta ekki eins einfalt og menn vilja af láta.
weeell, does Seðlabankinn have enough Euros to switch all the savings and all the lífeyrissjóðsmoney, too?
Forget about which currency to adopt at the moment . One thing we need to learn is that there is no shame in paying 289 Kr vs 359 kr for the same brand of creamy peanut butter by leaving Haugkaup at Kringlan and taking the escalator to Bónus.
Buy your fancy cheeses and beef tenderloin at Hagkaup but stop there! Go upstairs and buy the everyday stuff at Bónus. You don´t have money to throw away unless you are of the BMW/Range Rover/Hummer type persuasion who has just placed every average Jón in this country in the position of possibly being legally responsible for assuming a massive debt that should never have been ours in the first place. Head ém up, move ém out , Lock ém up…. the habeas corpus will follow! Áfram Ísland!
Roy – um, that’s what we’ve been doing since, like, forever.
JeffC- okay! The loony’s good enough for me.
Sonja, Hildigunnur – hlaut að vera eitthvert ‘catch’. Gat ekki verið svona einfalt. En eins og Gauti segir – alveg þess virði að skoða.
Is the króna really dead?
Also, I would rather Iceland not adopt the Euro. The E.U. is not Iceland’s friend, and has proved that through all this. Two E.U. members are blocking Iceland’s IMF loan, one of which is a Eurozone country. The E.U. hasn’t stepped up to help Iceland at all, whilst it sends aid to ailing regions all over the world.
The U.S. dollar isn’t such a good idea since the U.S. is on its civilizational downfall (though hopefully our downfall will be cushioned and slowed down by President Obama and subsequent good elections).
I think Iceland should just focus on rebuilding… rebuilding the króna, rebuilding the economy, rebuilding life, keeping this economic meltdown as a reminder that Iceland’s elite needs to get elected out forever (they utterly failed their sacred duty as representatives and leaders of your people, even if it wasn’t any specific individual’s fault). Really what this should be teaching the entire world is to never allow an elite who are cushioned with personal wealth, connections, and status from the results of their actions to run things. Unfortunately the world hasn’t learn a thing from this and Icelanders may not be learning anything either. It’s very strange how the media has portrayed this entire thing, and how little people have learned from it. The people who matter simply aren’t paying attention to the things they ought to be paying attention to. It’s really quite frustrating. So many lessons for the world to learn about our economic system (after all, Iceland was simply joining and, supposedly, succeeding in the world’s current economic system). I’m sick of this being blamed on Iceland when the fault is in the system itself. The entire world’s economic system is creaking and cracking like the old house I grew up in. I have no doubt, though, that whatever Iceland does to get itself back to normal, or at least to develop a ‘new normal’, will be pioneering inspiration to whichever economy falls next.
The more important thing is sort of what I thought Roy was going to say, what are the ramifications of changing currencies. The average Joe and Jan already know how to take the escalator to the discount floor. I’m even bringing my own cloth grocery bags with me to Iceland in order to avoid the plastic bags that like here in Canada are becoming taboo.
For a moment I giggled a bit over the $Canadian, The Loonie (check that spelling YT
), Canuck Buck, Northern Peso, money. But then I thought why not? It lucked out by having the right banking system for the current crisis (but we are getting hit and will get worse once exports slow down because of everyone else). Typically worth a bit less than the greenback which is a good thing given the more similar social systems. It is actually a good fit for both countries IMHO. And if you go down the EU path someday, please, take us with you.
Montenegro isn’t in the EU and it uses the Euro – but I read somewhere that it has the EU’s permission to do so. I don’t know if Iceland would need permission. If this is only a temporary measure, other currencies could be considered. How about the Norwegian Krone for example? Failing all that, you could simply give up on money and go back to barter!!
I like JeffC’s Canadian option- and the idea of a “Northern Alliance” would be very cool, no pun intended. Like begets like?
Alda – there’s nice site here called “Icelandic News Translated into English.” Do you think you know the person who does it?
http://newsfrettir.wordpress.com/
P.S. – What does frettir mean?
I just hope something sensible happens really really soon.
Adopting the Euro would seem like the most logical thing for Iceland to do but there is a major issue with determining at what rate the existing kronas in the Icelandic economy would be bought up. If that rate is too low then everybody’s life savings are wiped out, if it is too high then Iceland may well need loans to recapitalize.
Ireland would have suffered Iceland’s fate if it still had an independent currency, the Euro saved the country’s economy. Even if Iceland were officially part of the Eurozone it would have even less influence than Ireland on interest rate policy etc. Life in the Eurozone means having interest rates set for German conditions rather than those that your own economy needs. Ireland has not yet learned how to use other economic instruments effectively to cope with the loss of this tool.
“I don’t know if Iceland would need permission. ”
I’m quite sure it would. Without permission, it firstly would be hard to get the necessary amount of banknotes and coins, and then the EU could prohibit its banks from doing business with Icelandic ones, making export and imports almost impossible. However, the idea is interesting, and consequently not only Montenegro, but also Monaco, San Marino and the Vatican state are contractual members of the Eurozone. Of course, you have to get the necessary Euro stock somehwere, and since the krona isn’t traded, this means credits, agaon. And pls note that membership in the Eurozone comes with duties, too.
“The actual criteria that member states must respect:
* an annual budget deficit no higher than 3% of GDP (this includes the sum of all public budgets, including municipalities, regions, etc)
* a national debt lower than 60% of GDP or approaching that value.”
Hmm, I guess this would be difficult in these times of crisis, especially for the incompetent Haarde administration…
“Life in the Eurozone means having interest rates set for German conditions rather than those that your own economy needs.”
Wish it were so! For some years round the turn of the century, German economy would have greatly appreciated lower interest rates, but the European Central Bank decided to keep them up in order to counter inlationary trends in other nations, for instance Spain. That everything in Euroland goes according to German wishes is an urban myth, really.
“For some years round the turn of the century”
Uh, sry, nonsense. Of course this happened after the Euro become the official currecny in 2002.
I suspect adoption of another currency is the way you will go, but I do hope these economists aren’t peddling it as a pain-free solution.
It’s not just a matter of how many notes and coins change hands, it’s the entire money supply. A micro-currency like ISK is always going to be vulnerable to fluctuations, and in the current hurricane stands no chance, which is why it was a terrible idea to take out foreign currency loans/mortgages even in tranquil times. Were they aggressively marketed without pointing out the dangers? If so, that is disgraceful.
Trying to rebuild Iceland’s economy with ISK as the foundation is going to be like running up a down escalator. Abandoning the currency is not going to make life any easier, nor imports cheaper. Whatever currency was adopted, you will only get what ISK is worth in the market (which is decidedly less than the internal subsidised rate).
It would, however, provide a more stable basis from which to move forward.
We know this full well in the UK. Sterling is at an all time low against the Euro, and I predict a full blown crisis a short way down the road (which will crucify my already struggling small import business) as the markets have grave concerns about the fundamentals of the UK economy. They’re not the only ones. Whether this is preferable to being within the Euro and living with the “one-size-fits-all” policy remains to be seen (as eloquently described by Aidan).
Thanks for the input, everyone. Really interesting reading.
We hadn’t heard many ‘nay’ voices as of yesterday, but they are now beginning to surface. Apparently this solution isn’t as simple as originally outlined (if it sounds too good to be true, etc..) as there wouldn’t be a stable backing institution for the banks (there would be no CB – not that the current one is doing much good at the moment). So – a more complex issue than initially thought. No matter how you look at it, we seem to be in a major pickle. To put it mildly.
Andrew – thanks for that link (it got caught in the spam filter). It is indeed a good site. I don’t know this guy, but on his ‘about’ page he says:
This is an idea from someone out there who´m i do not know, but gave me the hope of making a few euros
I wonder if the idea came from this post?
In any case, I like his ‘donate’ link and think I’ll adopt it, myself.
Hello Alda,
this idea came through a friends friend from England. Thank you for your interest.
Best regards
Ps. Frettir is news in Icelandic.
Ah. Thanks for clarifying.
It’s a great (and no doubt much-needed) site and I wish you all the best with it.
“Is unilaterally adopting a new currency our answer?”
Perhaps but not in the way outlined. First Iceland has little choice in the matter, you likely will end up adopting a new currency and that is likely the Euro.
Second Iceland still requires massive loans both to make good on previously entered into obligations and second to inject liquidity into the economy. The IMF is unfortunately the only game in town.
Anyone who is seriously suggesting that “using its current foreign currency reserves to buy reserves of the currency it wishes to adopt, and just making the switch” is a panacea for Iceland’s economic problems is seriously deluded.
“…which would mean that the Icelandic nation would wind up with a completely useless currency AND massive foreign debt, to boot.” You have the first now, you are headed for the second soon unfortunately.
Stories like the article in Fréttablaðið are like “fireman saves cat from tree”. Everyone feels good about it and it allows you to ignore the stories you don’t like or to escape, if momentarily, from the gravity of a difficult situation.
Iceland’s problem are very serious. There is no easy solution and no solution that will not involve serious economic, social and psychological discomfort. You are just starting on the road to fixing this, the bad things haven’t really happened yet.
-Kristjan
An interesting article… With currency adoption being such a major change, populations are normally infomed of all the pros and cons, full debates held – and ideally a referendum. And it’s not obvious how the euro’s adoption criteria can be reconciled with several of Iceland’s current economic indicators (eg inflation rate)… Maybe the Danish Krone instead?! After all, Greenland doesn’t have a weak greenback…
Thanks for looking on the bright side, Kristjan
Hi Trev,
Yes sorry that is a dash of cold water. However, ignoring or minimizing the problems will not provide a solution. Iceland needs to face up to it, make some difficult decisions and start moving towards a new day.
-Kristjan
Hey Alda,
Aren’t most Icelanders already in favor of adopting the Euro? (I could of sworn I saw that in a poll in Fréttablaðið last month perhaps) And how does that decision get made? Referendum? Parliament majority with exec. approval? It seems like a really lengthy process that could take years to enact — leaving us to suffer with the Króna through the Kreppa.
Also, isn’t Davið Oddson educated as a lawyer? Who was the genius who thought letting a lawyer (not a skilled economist) run the Central Bank? CRAZY!
I must say that a part of me is thinking that we should seriously consider taking up the euro. Although the sentimental part of me is loath to part with the króna…
… but I still see some major problems with it. Apart from the obvious initial switch, then yeah, not having control over the exchange rate and the money supply is a HUGE thing. Monetary policy, as opposed to fiscal policy, is a major tool that the government through the central bank (or CB first, depending on how each country organises itself) to either slow down or speed up the economy. Fiscal policy (raising or lowering taxes, building new things or slashing expenditures) works too but is much slower, as we’re talking about physical changes that need to be implemented into law and passed through parliament before they trickle down into the economy. Which is why using interest rates and the sale of bonds etc to control the money supply has been used so much. And I am reluctant to give up control over this to the EU, because mainland Europe often cycles together – if things are bad in France, chances are things are bad in Germany as well – but Iceland, based on the fishing industry, might be cycling in a completely different direction. And I know all countries within Europe don’t dance completely tandem, but the chances are still greater that they’re heading in the same direction, business-cycle wise, than Iceland.
That being said, I’m pretty sure I read in the news some while back that the EU has sad a flat no to Iceland joining the Euro without joining the EU. And I’m conflicted about the EU as well.
But then again, people are saying that this whole crisis is the end of traditional monetary policy… and maybe this is just what has to be done. Enter into negotiations with the EU, that is, because we would definitely need their permission.
Decisions decisions! I am so glad I don’t have to decide anything. As much as we criticise the government, I am really glad I’m not in their shoes right now.
It’s a big decision, but if your government really is as incompetent as you say then perhaps it might be a good idea to tie into something bigger. Forget the US dollar, as several have said we are not doing very well ourselves. For location the Euro would make the most sense, but why not climb on the tail of a rising nation, perhaps adopt the Chinese yen? That would be interesting.
ouch, Chinese yen? With them holding a few trillion in greenback bonds to fund the Iraq war I’d be afraid of what will happen once that shakes out. But who knows, when they cash in you might have shares in Texas or some place like the Saudis did a decade or so ago. And the corrupt business style there will make Icesave look like a church bake sale.
Go with the Canadian dollar. I like that idea the best so far even if the Euro sounds more logical at first glance.
Alda – Note that Iceland would still have a central bank, even if it joined the Eurozone as a full member (every member needs its own central bank to apply ECB policy). Perhaps Doddsson could have a job for life applying policy, instead of deciding it!
However, bear in mind there’s no chance the Eurosystem would accept a country with 20%+ inflation rate, 12%-18% interest rate, weak economic plan, etc into the Eurozone. Iceland’s interim option may be to adopt the euro without a formal agreement (similar to Kosovo, Andorra, etc). In any case, large loans would still be required – and at least the strings attached to the IMF loans will enforce more prudent policy next year.
I was thinking in different terms last night. What if the Icelandic government created a new currency that was backed by the resources of the country? I was initially thinking of calling it The Cod, and the notes and coins could denominate a fixed amount of high quality frozen cod (or the equivalent amount of other seafood). The unit might represent 1 kilo of cod, with notes for multiples of 5, 10, 20, etc, along with fractions there of … it would be necessary to bring back the aurar, which would represent 10 grams of cod.
Under this system, the fish on Iceland´s money would not just be art – they would represent real value. People would no longer be expected to trust in banks with piles of loan papers written in strange legalese – instead, the wealth of the nation would be stored in bonded freezer-plants, and reserves could be verified by anyone who can count. This could be capitalized quickly … the annual catch of seafood was worth around $1.4 billion in recent years. The government doesn’t own all of that value, but use a good chunk of it to create the currency.
No matter what Iceland does internally, it will still need convertible currency for international trade, and things won’t get back to normal until the mountain of debt is restructured somehow. Maybe The Cod is less of a fix than a transition. International trade will require hard currency as people are less likely to take promissory notes from Iceland. While The Cod might be convertible if it stated that each note represented 1 kilo f.o.b. (free on board a ship) from Iceland, it isn’t clear that the world is ready for such a currency.
The Cod would still be subject to inflation if the fish harvest fell and currency wasn’t taken out of circulation. But such moves might restore faith among some people that today´s Iceland has substance. The government could also issue aluminum certificates along the lines of the old US silver certificates and gold certificates … if the government accepted payment from the smelter companies in aluminum for electricity and taxes, they could build up another wealth stockpile that was easy to verify and could be used to back the currency. A third currency that could be implemented instantly is the Joule, which would be backed by energy.
Comments from people around me: The Cod would instantly be renamed The Flounder by people in the UK to symbolize Iceland´s fall and struggles. Journalists would write pseudo-clever headlines for articles that involved an infinite number of variations around the theme ‘Iceland – In Cod We Trust’.
Alda,
Thank you for the nice summary and explanation.
Iceland is turning into a new little laboratory for economic experiments. The previous laboratory, built by the free-marketeers and the neo-liberals, has burned down to the ground, thank you very much.
James – following the American model, the new money could be called “cod-backed securities”
cod-backed krona, the jokes are too easy. But are we assuming that having cod stocks to back up the currency is similar to gold backing up the Greenback? See, that doesn’t happen either. I wish it did. They taught me about Ft Knox as a child but that isn’t how it works anymore. That’s been a big part of the problem. The traded value has little to do with what anything is actually worth.
But someday I suppose we’ll put monetary value and title ownership on every square metre of this planet. And the same people that own the bulk now will own everything else.
Thanks for your input, everyone. As always, I’m really enjoying this discussion.
Jonathan – the ‘in cod we trust’ is already old and tired around here …
More progress on the exchange rate for the ISK. The official rate has gone up to 171 ISK to the €. The unofficial one is 281/1 and quoted often is a rate of 200/1 . I guess it will take a couple more weeks for it to settle. At least this is better than last week.
I’ve read an article claiming the Icelandic GDP will drop around 15% in ISK terms and about 65% in € terms, assuming an exchange rate of 200/1.
Personally I doubt that adopting the € would work like a magical trick to get you out of this mess, but I can’t back that up with any solid reasons. You might want to open up Iceland for $ and € payments in shops at (somewhat) unfavorable exchange rates. That could work.
Just a thought – can we nationalise Alcoa and Alcan in Iceland?
Yes, the aluminum companies could be nationalized. But what would the consequences be?
When nationalizing, a government either forces the business to sell, or it seizes the business. Does the government of Iceland have the money to buy the aluminum smelters? Do they have a legitimate reason to seize them? I think the answer to both questions is no.
If Iceland did nationalize the aluminum companies, they would be greeted with lawsuits from the home countries to Alcoa and Alcan. No one would want to loan money or invest in a country where the government first welcomes the investment, then takes it. Icelandic assets abroad could be seized in retaliation. Although the IMF package is stalled at present, nationalization would absolutely kill any such restructuring.
Iceland has problems with getting enough foreign currency, since it relies so heavily on imports. However, if they DO find oil offshore, then Iceland would have more than enough currency to keep the ISK floating like normal.
If the govt can weather the current crisis, they can start stabilizing things so long as 1. They stop funding global-sized banks. 2. They pay off the 2bil for the dam. If they don’t, then they will get their foreign currency the way most countries in the world do… By sending the young overseas to work and send remittances home.
Jonathan, you can’t nationalize the Aluminum smelters. While Iceland processes the bauxite into aluminum, it doesn’t have bauxite itself. If they took Alcoa’s smelters, they would still need to buy the ore from Alcoa.
twas silly I know – another random thought – what happened to our friend from Qatar – I am assuming that he lost all his money in Kaupthing too…
not all his money – rather his investment (purchase of 5% of Kaupthing on 22 september 08)
Yeah right!
Let’s adopt the euro, or the ruble, or the dollar, or whatever currency is fashionable at the moment. Who cares what the ECB is saying. Or even better, let’s do away with this currency stuff completely. Why not return to the goldstandard. After all gold won’t lose its value, will it, unlike the ISK.
Nobody so far has mentioned the big elephant in the room: the unsustainable currency deficit (25% according to wikipedia).
If Iceland was really adopting the euro unilaterally without backing of the ECB, money would flow out of the country really fast. A horrible deflation would be the painful result. In this messed up situation Iceland is currently in, there is no easy way out but quiet negotiations with the main debtors, to obtain refinancing at more favorable terms.
In the end Euro adoption is the only way, but without an agreement with the ECB, it’s economic suicide.
Willem H.Buiter and Anne SIbert’s infamous Cassandra-like article has now been officially published, with an updated introduction. They don’t offer any solutions, but they are (or were) against UE (there, I’ve just created an acronym!). “Unilateral euroisation would deliver macroeconomic stability benefits, but would not provide Iceland with a lender of last resort and market maker of last resort capable of creating euros at will. It would therefore do nothing to enhance Iceland’s financial stability.” They suggested recapitalizing the banks (oops, too late for that now), or joining the EU. “The only alternative [to the EU/EMU] route is to encourage the banking system to move the bulk of its foreign-currency-denominated activities and portfolio overseas, most likely into the euro area.”
Well, these suggestions contain the possibility of a “third way”. Iceland could have a real bank and economy (for imports and exports)located outside of Iceland using Euros, and a small domestic bank and economy using “play money”, i.e. the kronur (sorry, Kronur!). The new offshore Central Bank would pretend to be a regular European bank and would be backed by the European Bank and the domestic bank could be controlled by currency restrictions (on withdrawals, transfers etc.) of the sort that Latvia used to prevent a run on its banks.
All you would need is some foreign country within the EU to host that new bank — Finland? Ireland? Luxemburg? Anybody, please?
I’d say wait until 1 ISK = £1, then adopt the pound.
Won’t be long…
trev – better yet, why not just merge Iceland and the UK? We could be a province … similar to, say, Northern Ireland.
Wing Commander Volestrangler has referred to “Willem H.Buiter and Anne SIbert’s infamous Cassandra-like article has now been officially published, with an updated introduction.” It is available for public download as a PDF at http://www.cepr.org/pubs/PolicyInsights/CEPR_Policy_Insight_026.asp
It is worth reading while keeping in mind that it was a very clear WARNING about the Kreppa that was commissioned by Landsbanki and delivered to them in April and then “On July 11, 2008,
we presented a slightly updated version of the paper in
Reykjavik before an audience of economists from the
central bank, the ministry of finance, the private sector
and the academic community.” The authors were requested, at that time, to keep it confidential because of the sensitivity of its content which I assume to be the dire predictions of what eventually took place.
What that audience did with the information is anyone’s guess. They certainly did not act on it.
As others have said, don’t use the US dollar. I think the US in future will have problems with it unless Obama manages to do something about the amazingly huge foreign debt the US has (and manages by printing money). Although the EU itself may not appeal to Iceland, you can adopt the Euro without joining the EU. It would also make Iceland more convenient for tourists. As for adopting the Norwegian krone, Norway’s not keen on it because there are no advantages for Norway.
From what I’ve been reading, Iceland nevertheless cannot join some other valuta union without first getting its own financial house in order, so switching currencies is not a solution to the current problem.
The United Kingdom of Great Britain, Northern Ireland and Iceland… Well, Iceland could retain its own parliament etc (just like Scotland), but hand over central bank functions to the Bank of England – and also make full disclosure of the Baejarins beztu pylsur recipes…
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