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Iceland To Introduce The Euro As Legal Tender?  
User currently offlineSlz396 From , joined Dec 1969, posts, RR:
Posted (7 years 5 months 4 weeks 16 hours ago) and read 3234 times:

We all know the global credit crisis has hit Iceland particularly badly, so much even the entire banking system of Iceland has completely collapsed and the government can't keep up to its promisses of guaranteeing the deposits to foreigners given the fact the local currency has devaluated dramatically over the past month. As such, if every EU customer of an Icelandic bank demands to be re-imbursed, Iceland is litteraly bankrupted.

One of the ways to solve the currency crisis which Iceland is facing is a swift introduction of the euro. In principle Iceland could introduce the euro unilaterally, just like Montenegro has done. Euros can be bought freely on international currency markets and a small economy like Iceland does not need a huge volume of euros in cash. All it would take is a law which makes to the euro the only legal tender, after which prices would have to be given in euros instead of Icelandic Krona and the Krona can be abolished.

Kari Heimonen, professor of economics at the University of Jyväskylä, writes in a guest editorial for the daily Helsingin Sanomat newspaper that Iceland should introduce the euro asap in order to overcome the financial crisis. "The global financial crisis has hit the little island nation Iceland hardest. It is clear that it will not be able to survive this situation on its own.'

Introducing the euro would solve Iceland's problem of having to support a rapidly and continuously weakening currency, and takes away the risk of any further devaluations of the Krona, as well as the aggravating consequences on the Icelandic budget which at one point will have to live up to its promisses towards all the foreign deposit holders who awnt to see (part of) their money back.

Opinion polls have suggested more than 3 out of 4 people in Iceland are in favour of an introduction of the euro. Better lock onto the euro system now, than stay with the Krona and make it twice as hard to earn all those euro's back later, don't you think too?

11 replies: All unread, jump to last
User currently offlineKlaus From Germany, joined Jul 2001, 21652 posts, RR: 53
Reply 1, posted (7 years 5 months 4 weeks 14 hours ago) and read 3184 times:

It might solve some of the problems Iceland has right now, but it wouldn't help the icelandic banks which have debts denominated in other currencies anyway. And foreign account holders won't usually have those accounts denominated in Icelandic currency, have they?

The only ways to get out of those would be either full repayment or still some kind of bankruptcy proceeding...

User currently offlineEaa3 From Iceland, joined Sep 2007, 1145 posts, RR: 0
Reply 2, posted (7 years 5 months 4 weeks 9 hours ago) and read 3117 times:

The problem with that is that you can't have everyone in a country switch out of the local currency because then everyone would be selling and no one buying. The currency would become worth less than the paper it's printed on. The only way for Iceland to switch to the euro would be for it to join the European Union and then the European central bank would simply swap all Icelandic kronur for Euros at a set price. This is exactly what has been done for all the countries using the euro.

User currently offlineSignol From United Kingdom, joined Oct 2007, 3094 posts, RR: 7
Reply 3, posted (7 years 5 months 3 weeks 6 days 22 hours ago) and read 3061 times:

Quoting Eaa3 (Reply 2):
This is exactly what has been done for all the countries using the euro.

Actually not... Montenego uses the euro, but not "officialy" - they originally used the Deutsche Mark before 2001, since the breakup of Yugoslavia. I think it's a similar system to Ecuador using the US dollar as its currency.


Flights booked: NWI-AMS-JNB-DUR, JNB-AMS-NWI
User currently offlineHT From Germany, joined May 2005, 6526 posts, RR: 19
Reply 4, posted (7 years 5 months 3 weeks 6 days 21 hours ago) and read 3049 times:

Quoting Signol (Reply 3):
Montenego uses the euro, but not "officialy" - they originally used the Deutsche Mark before 2001, since the breakup of Yugoslavia.

Also Andorra and Kosovo have the € as official currency - both unilaterally introduced, i.e. they have no kind of voting on decisions and may not mint their own coins.

Carpe diem ! Life is too short to waste your time ! Keep in mind, that today is the first day of the rest of your life !
User currently offlineAverageUser From , joined Dec 1969, posts, RR:
Reply 5, posted (7 years 5 months 3 weeks 6 days 19 hours ago) and read 3019 times:

Again, few people realize that Iceland would not be "adapting another legal tender", but in reality the whole country and its resources would be sold at a set price for forever to the Eurozone countries and the ECB. Of course everyone is looking for a bargain - after all it's not too often that a whole island nation and the surrounding waters is for sale!

[Edited 2008-11-04 05:16:09]

User currently offlineAlessandro From , joined Dec 1969, posts, RR:
Reply 6, posted (7 years 5 months 3 weeks 6 days 13 hours ago) and read 2954 times:

Panama uses US$ as bills and only print coins, AFAIK.
Perhaps a way to go for Iceland?
1 New Icelandic Crown as coins=1 Euro and for notes, 5 and up they use €uro´s.

User currently offlineBraybuddy From Ireland, joined Aug 2004, 6365 posts, RR: 30
Reply 7, posted (7 years 5 months 3 weeks 6 days 11 hours ago) and read 2922 times:

If there were ever an any doubts about the benfits of a single currency the recent financial crisis certainly blows them of the water. If we had held on to the Irish pound, it would have crashed through the floor by now.

I doubt if Iceland could join the eurozone, seeing that it's not even in the EU. And all the countries who did had to first fill certain economic criteria. But I don't see why the country couldn't have euro and krona circulating side-by-side, as it's not unusual for a country to use another country's alongside its own (usually US dollars).

I wonder if this crisis will encourage Iceland to seek EU membership?

User currently offlinePPVRA From Brazil, joined Nov 2004, 9092 posts, RR: 37
Reply 8, posted (7 years 5 months 3 weeks 6 days 7 hours ago) and read 2882 times:

Quoting Alessandro (Reply 6):
Panama uses US$ as bills and only print coins, AFAIK.
Perhaps a way to go for Iceland?

Panama has also done very well as far as monetary stability goes. Unlike every other nation in Latin America.

They also never had a central-bank.

[Edited 2008-11-04 17:12:55]

"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineAlessandro From , joined Dec 1969, posts, RR:
Reply 9, posted (7 years 5 months 3 weeks 6 days 7 hours ago) and read 2875 times:

PPVRA, they had the 1-week Panama bills, otherwise no big hiccups during 100 years of independence.
My marshall plan for Iceland.
Firstly, the old Icelandic crown is legal tender on the island, but only a limited amount
for Icelandic new crown can be given to companies (none to new companies,
set up after the crisis) and Icelandic
citizens, other exchangable currencies are only changed into new Icelandic crowns.
The new Icelandic crown is only minted in coins below 5 €uro,
which are valued at the same as the €uro.
Foreigners get their money back when possible, all imports must be bought by new
Icelandic crowns, the old Icelandic crowns are only valid for goods on the island already.
Complicated? Yes, I was in Suriname when the got rid of the Suriname guilder and run
it parallell to the Suriname $, reducing the zeros with three.

User currently offlineMD11Engineer From Germany, joined Oct 2003, 14968 posts, RR: 61
Reply 10, posted (7 years 5 months 3 weeks 6 days 6 hours ago) and read 2859 times:

Doesn't East Timor use the Euro as well?


Je Suis Charlie et je suis Ahmet aussi
User currently offlineBabybus From , joined Dec 1969, posts, RR:
Reply 11, posted (7 years 5 months 3 weeks 3 days 16 hours ago) and read 2733 times:

I'd like to see Iceland using the Euro. It seems a bit old fashioned having any other currency in use in the Euro zone or it's usual trading partners.

Time too for the UK to dump the Pound and get those Euros rolling through the tills.

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