Icelandic officials are readying the country to phase out the krona once current capital controls are lifted, according to reports.
Katrin Juliusdottir, Iceland’s new finance minister, told the Bloomberg news agency, “There’s a risk that while Iceland continues to use the krona we’ll always have capital controls. I’m not saying that it’s impossible to abolish the controls and re-float the krona by using other supportive measures. However, in my opinion, the smart thing to do is continue working toward European Union membership and euro adoption.”
She went on to add, “For a country that wants to have strong commercial links to the international community, it’s hard to utilise the krona as the country’s currency. That’s a fact. Our currency is extremely volatile and sensitive toward external factors.”
The comments come despite rising controversy surrounding the island nation’s bid to join the EU and the euro, as the common currency crisis continues on the continent.
Meanwhile, Iceland’s government is moving towards the removal of capital controls that were put in place following the country’s banking collapse in 2008. According to figures from Arion Banki, the measures are currently keeping overseas investors from removing some USD 8 billion (EUR 6.2 billion) from the Icelandic economy.
Adoption of Euro in Iceland is a possibility: it has advantages and disadvantages to consider. Despite the recent difficulties Euro is a solid currency and “europhobes” have a great fear that Iceland disavow their line adopting it as official currency. They even try to pass the Euro as the cause of the difficulties of Spain or Greece, which are determined by the global crisis and the unconsciousness of their governments in managing public finances. You consider rationally about this possibility without influences of “EU bureaucratic Moloch” and other paranoid idiocies that europhobes repeat as stunned gramophones, after reading the tabloids.
The socialdemocratic lady Madam Juliusdottir is only expressing the EU-friendly socialdemocratic party in Iceland – she is not expressing the opinion of the people – the nation.
Polls lately show that between 60 and 70 % of Icelanders do not want to join the EU nor the euro.
So do not listen to her at all, she like the rest of the socialist/communist Government (their time will end next spring) is using every opportunity to force the EU upon the nation against the people. The best thing this Government can do for the people of Iceland is to move to some euro paradise like Spain, Ireland, Portugal not to mention the Heaven of Glory The Greece. 25 % are without job and 60% of young people have no work. That must be heaven for these euro-lovers that I guess are not satisfied until 100% of the population is without work.
I don’t know what’s best for Iceland and if I did I wouldn’t mention it unless I was asked (guess how often that happens).
There are a few important points being left out of the debate, though.
http://en.wikipedia.org/wiki/Optimal_currency_area
Sharing a currency can be a really bad idea unless some other conditions are present.
On the other hand, the realities of Iceland don’t match the usual assumptions about an independent currency. Iceland export fish. If the krona goes down, Iceland won’t export any more fish, so devaluation won’t “restore competitiveness” the way economists say it will when they talk about generic countries.
Stabilizing an economy also requires a “lender of last resort” (http://en.wikipedia.org/wiki/Lender_of_last_resort). No argument is complete unless it answers the question of whether the Canadian central bank or the ECB will serve that role.
In general, any outside economist owes you the answers to three questions:
1. “How does Iceland differ from the abstract country in your models?”
2. “How have you tailored your advice to Iceland’s unique circumstances?”
3. “Why are you still stammering and not answering the first question?”
What are you doing iceland?! Do you want to end up like Greece or Spain? Stay away from the Euro!!! Run from it!! You just recently fought for financial independence and won!! Please do not do this!!! The Euro is economic warfare at it’s finest… this is counterproductive… have you considered competing currencies? anything but this!! please!
Waste of time to let the people draw up a new Islandic Constitution when you are planning to give away all your democratic rights to join the bureaucratic moloch of the EU.
Well, sorry for that little word “bizarre” in my previous comment – that was a tad over the top. I just didn’t – I still don’t – understand, how anyone might consider joining the EU, or even the Euro currency.
Good luck – lots of luck – Icelanders! … :)
It’s bizar they ware willing to do this.
At this moment the future of the Euro is very unstable.
It would be bizar that Iceland is willing to risk another crisis, the previous one is still not over yet.
Be proud of you’re own currency.
I’m from Germany, and I simply find it totally bizarre – to put it mildly – that some country – any country – might consider joining the Euro in times like these, when nobody can predict how long the Euro will survive at all.
Please consider: Even the Finish foreign secretary some weeks ago said to the British Telegraph: “We have to face openly the possibility of a euro-break up”. Now what … ?!
Icelanders, think twice, or more, whether you really are prepared to join a ship that already has massive troubles to stay on course … :)
Don’t do it, Iceland!
DON’T DO IT!
Iceland is a proud, dynamic and independant country.
One of the reason why I love visiting Iceland is that you just get on and do stuff without worrying what others think. Many of us in the UK wish we could be more like Iceland!
IF you are crazy enough to join the EU you will be bossed about by unelected pen-pushers who have no regard for your unique environment, culture and lifestyle.
As for the Euro currency – has your finance minister lost her marbles? Look at all the trouble it is causing even the richest countries in the EU. By all means trade with the EU, BUT you must make clear it is on YOUR terms! Otherwise you will be bullied into loosing your independence, have stupid rules forced onto you and be severly restricted in what you are allowed to do in your national interest. PLEASE remain just the way you are, that’s why tourists love to visit you and keep returning!
DON’T JOIN THE EUROPEAN UNION!!!
It needs two years o stability after the currency controls are removed to qualify for the Euro. Does that seem very likely in the next few years?
I really hope and pray iceland don’t join EU let alone the euro, i’ve not long returned from cyprus where they joined the Euro in 2008, and seen what it has done to the country, tourism has been damaged property sales are in decline which before joining the EU and the Euro was a hot spot for buyers price hikes due to the governments economic policies not working, before Cyprus joined the EU and the Euro Cypriots prospered , new they’re being dictated to by brussels how they should live their lives, do the Icelanders want that.
As an irish/ british man from Northern Ireland, i know the consequences of being part of this union of Europe. Politicians will tell you that joining can only be good and will bring prosperity and better trade. But what what we have seen is the courts and laws and parliments of each supposed sovereign nation being hijacked and control assumed from a central government based in brussels. I admire Iceland’s people for going against the trend Europe and the world followed, taking from the poor and middle class and giving to the rich bankers and doing the right thing not bailing them out but throwing them in prison. If you join the this tyrannic union, i assure you will not be allowed to express those freedoms agian. Please i beg you for your soveriegn nations good DO NOT JOIN THE EUROPEAN UNION !.
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I am sad to hear that Iceland is considering accepting the Euro as your currency AND removing capital controls. I understand the need to be accepted in the global trade community, but to give up control of your currency is a death sentence.
Today, the USD has lost 98% of it’s buying power since control of our money supply was given to a private banking corporation. I had high hopes for Iceland after the country refused to bailout the banks that participated in the worldwide depression. However, it seems that Iceland is falling prey to the same powers that are raping the nations of the world.
If Iceland MUST accept the Euro, for your own survival and stability, please do not eliminate the krona. Understanding the history of America’s money supply, my advice is to, at least, maintain an alternate and second currency in Iceland. Accept the euro, but continue to use the krona, allowing your people the choice to use which ever currency they prefer.
America was a great country before it became enslaved to the international bankers. Today, the people have little influence or control of the actions of our country. We lost our country when the bankers were free to print all the money they needed to buy political influence.