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Bye-bye króna, hello … greenback?

Our Prime Minister, Geir H. Haarde, has now come out and said that it would be much more logical for Niceland to adopt the US dollar than the euro.

Just picture it: paying for our dried fish and brennivín with greenbacks featuring Abe Lincoln, as opposed to Nicelandic krona notes featuring a picture of YT’s dad.* I’m just sayin’.

Still, hearing old Geir talk, it doesn’t seem like such a crazy idea. We already do much of our business in US dollars, so if we were to join a monetary union it’s a more logical choice then the euro, despite our being in Europe. Also – and I know that this is the really clincher – old Geir doesn’t actually want to take up the euro because it would mean that we’d have to join the European Union. I also know he has the backing of a large share of the nation on that front. Our independence was too hard-fought for us to succumb to another controlling body – at least that’s the sentiment among a great number of Icelanders.

At any rate, it seems like it’s becoming crucial to do something [anything!] – the rate of the krona has fallen by 40 percent [!!!] since the beginning of the year [HINT: if you’ve been meaning to visit Niceland, this is the time to do it] and who knows where it will all end. Trouble is, the greenback isn’t doing so well, either. Pound Sterling, anyone?

ANOTHER BEAUTIFUL DAY
This weather reporting is getting kind of dull – we have the same weather all the time, day after day. Brilliant sunshine, cool breeze, yadayadayada. The grass is starting to look parched – not something we experience very often up around this latitude. Right now 55°F [13°C – hell, why don’t we take up imperial measurements, too?] and the sun came up bright and early at 2.59 here in the capital, will set at 12.02 tomorrow.

* Trivia alert: my father actually served as a model for the drawing of Jón Sigurðsson, our independence hero, who is on the ISK 500 krona note, i.e. it’s a picture of my father’s body with the head of Jón Sigurðsson on top. So anytime anyone asks to see a picture of my father I can just pull out my wallet and show them the ISK 500 note, very convenient. Not that anyone ever asks, though.

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  • Cyndi in BC June 27, 2008, 1:11 am

    Firstly, I really like your “new” blog layout! I usually read your blog on Bloglines so don’t see the actual layout very often.

    So, if you don’t want euros or greenbacks, you could consider Canadian currency, it comes in lots of nice colours. 🙂 It’s too bad that Iceland needs to consider changing currency though.

  • Bluegrass Mama June 27, 2008, 1:17 am

    Personally, I’d love for you to switch to Farenheit, so I don’t have to do those mental computations! But as for the dollar, it seems like it would be a real blow to your national identity, even more so than the euro. Except you wouldn’t have to become the 51st state…

  • Jon June 27, 2008, 2:41 am

    I’ve been asking to be paid in euros instead of dollars (they won’t do it, of course). Certainly Niceland could pick a more stable currency. Besides, I really like looking at coins with fish on them. What could be more unique?

  • Rozanne June 27, 2008, 5:33 am

    Yeah, why not the Canadian dollar? It’s prettier and worth more. 😉

  • Lucy June 27, 2008, 8:52 am

    ah, but even nicer than coins with fish on them are coins with loads of different things on them … as in what country decided THAT would look good on a coin, ergo Euro

  • PhilippeP June 27, 2008, 9:12 am

    Hey , I didn’t know about the ISK devaluation, good news for me since I would be in Reykjavik end August… but calculation shall not be easier , I liked the 1 euro = 100 ISK , but hey you can’t have everything ..

    Next , coins with polar bear on it , and like old time , with a hole in the center … !

  • alda June 27, 2008, 10:29 am

    Cyndi – the Canadian loonie! Yes – why didn’t Geir think of that? 🙂
    Incidentally, can you read my entire posts on Bloglines, not just the summary?

    Cat – but I do the mental computations FOR you in Farenheit in each post!!

    Jon – oh I’m sure I could think of lots more unique things … but I agree, the fish is ok.

    Rozanne – and not as confusing as the US dollar, on account of the same colour.

    Lucy – you know, I don’t think I’ve ever examined a euro.

    Philippe – yes, your money buys a lot more here in Niceland than it used to! Not that it’s exactly CHEAP mind you …
    Oh, and I like the idea of coins with polar bears on them. 🙂

  • Chris June 27, 2008, 10:33 am

    I am not really sure, if this would be a wise decision. The Dollar is also not a very stable currency (it should be higher than 80 for example) and the risks which are coming up in the US (like crashing banks, the FED which hands out hundreds of billions to the banks which will possibly be lost, the huge deficit of the state) is not really calculable. Euro would be better, despite the fact, that Iceland has to go into the EU then. How about something like the Swiss currency?

  • Abby June 27, 2008, 1:07 pm

    Can’t “they” devise a monetary system where 1 US dollar = 1 Canadian dollar = 1 Euro = 1 Krone = etc.? 😉

  • noes June 27, 2008, 3:37 pm

    if economy goes haywire, you can devalue ISK and still export things.

    When you’re trapped in some other currency, this does not work.

    Just look at Spain/Portugal/Italy/Greece. They should devalue but cannot. The Northern eurozone dumps them with exports and gets angry because of defaults and southern inflation.

  • tk June 27, 2008, 4:04 pm

    Hey, I just happen to have a 500 ISK note in my wallet. (A good luck charm. Been carrying it for three years and haven’t been crushed by a falling piano…yet.) So that’s your dad blogging on the back? The family resemblance is striking. 😉

  • Keera June 27, 2008, 4:53 pm

    I wouldn’t switch to the US dollar. It isn’t backed by anything. Whenever the US needs more dollars, it simply prints more. It doesn’t actually do anything to earn back the dollars that have left the country (mainly to buy oil). There have been times when Norway wondered about keeping its krone, but then things right themselves again. No, Iceland, you hang in there with Norway – the other country that doesn’t want the euro. 😉

  • tk June 27, 2008, 6:46 pm

    You know, Alda, you should adopt both imperial measurements and the greenback. Then watch the American tourists have seizures when they see the price of gas(*) in units they can immediately understand. Maybe they would stop whining about paying $4/gallon. (What’s it in Iceland now, $8?)

    (*) i.e., petrol. Not as in, “GAS! GAS! GAS!”

  • delara June 28, 2008, 12:11 am

    I am sad to let you know that although the “greenbacks” still have green in them, the higher denominations are now far more colourful. Actually, I’m not sad at all. They are quite fetching. Now to get rid of the $1 bill in favor of coins…

  • Trevor June 28, 2008, 4:19 pm

    Isn’t having your own currency a vital part of your hard-fought independence? There will always be ups and downs in currency… and at least having an Icelandic currency more accurately reflects the Icelandic economy than using some other currency controlled by other people and fluctuating according to foreign actions.
    Maybe Norway and Iceland could make a non-EU Krona Union.

  • noes June 28, 2008, 4:20 pm

    yeah, you could call it the Kalmar!

    SCNR

  • ReallyEvilCanine June 29, 2008, 12:05 am

    Keera the US is not Zimbabwe. The US does not just print more paper.

    Abby’s idea is a better way to go, pegging the krona to a particular currency, preferably the Euro despite US trade for reasons of stability and not just the current financial mess the dollar is in. Both the dollar and euro are fiat currencies. You don’t have to join a country or treaty to peg your currency. Bermuda is a prime example: they’ve pegged their currency to the dollar but remain an independent Commonwealth nation.

    Your personal allegiances aside, the Looney is too closely tied via trade to the US dollar. More sensible still might be a united Scandinavian krona. Each country could issue its own versions of one standard set of denominations (just like the euro) while the values remain constant throughout the regions. This would also give Denmark additional incentive to remain outside the EU’s EMU and therefore think more about its northern neighbours than the southern ones. The downside is that all Scandinavian economies and monetary policies would be tied together and Norway (with its oil) might be a tough one to bring on board.

  • hildigunnur June 30, 2008, 2:44 pm

    Denmark is in the EMU, though they don’t use the Euro, the Danish krone follows the Euro’s moves (can’t think of the economic phrase for that), so it might be too late.

  • Colin July 1, 2008, 7:47 pm

    Keera, I’m afraid you’ve got it backwards on two counts. First, A large part of the value of the dollar is that it is the currency typically used for oil transactions and is held as a reserve currency by various national banks. If oil was not traded in dollars, the dollar would be in much much worse shape than it is. It’s not a question of just sending the dollars out of the country for oil.

    Secondly, the US doesn’t print more money. We spend dollars in enormous quantities on imported goods, especially from China, who then lends us back the dollars to ensure that we keep spending them on Chinese goods, plus pay interest. In fact, we’re so reliable in our spending of dollars for the benefit of the Chinese economy that they also lend us the money to pay for wars using materials not purchased from the Chinese.

    There are plenty of good reasons for not converting to the dollar, but you didn’t hit on them.

  • howard October 10, 2008, 5:25 pm

    our Icelandic government officials said (Oct.,2008) that our ‘friends’ (in the EU zone) haven’t been helping them/us out of this brush with national bankrupcy lately. they are considering a loan from Russia to tide them over. if this is the real status, why not become the 51st USA state, have the FED bail them/us out, and never have to repay the loan?

    if it works for them why not us?