Iceland Goes Loonie

Iceland Looks to Loonie | BCBusiness
Iceland is seriously considering adopting Canada’s currency as its own krona has yet to recover from the 2008 financial crisis.

The North Atlantic nation is considering ditching its own currency and converting to the Canadian dollar.

Iceland and Canada have several things in common. Both are Arctic countries. Both our nations are resource wealthy. And soon, both countries could share a currency.
 
The North Atlantic nation is seriously considering ditching its own shaky krona and converting to the Canadian dollar. The krona has yet to recover from the 2008 collapse of Iceland’s banking system, so Canada’s stable financial system and economy probably looks pretty desirable right now.
 
While the possibility has been batted around in Iceland for months, the idea gained steam on Friday as Canada’s ambassador to Iceland Alan Bones said the feds would be open to discussing a shared currency.
 
The idea comes as a surprise since Iceland is posturing itself to enter the 17-member European Union and would assumedly adopt the euro as a result. However, the ongoing Greek debt crisis could scare off any new euro adopters.
 
While Iceland would reap the obvious benefit of a stable and liquid currency, we wouldn’t see much of an impact on our side of the pond. With a population of just over 300,000, the economy of Iceland is less than one per cent of Canada’s.
 
Iceland’s only significant tradeoff is that the nation would forfeit any say in its monetary policy – Mark Carney, the current Bank of Canada governor, would call the shots in Iceland as well.
 
But that’s a small price to pay for a country where one krona is worth less than a Canadian penny.