Icelandic króna
Encyclopedia
The króna (sign
: kr; code
: ISK) is the currency
of Iceland
. The króna is technically subdivided into 100 aurar (singular eyrir), but in practice this subdivision is no longer used.
The word króna, meaning "crown", is related to that of other Nordic
currencies (such as the Danish krone
, Swedish krona
and Norwegian krone
) and to the Latin word corona ("crown"). The name "Icelandic crown" is sometimes used, for example in the financial markets.
was introduced to Iceland in 1874, replacing the earlier Danish currency, the rigsdaler
. In 1885, Iceland began issuing its own banknotes.
The Icelandic króna separated from the Danish krone
after the dissolution of the Scandinavian Monetary Union
at the start of World War I
and Icelandic autonomy from Denmark
in 1918. The first coins were issued in 1922.
.
Starting in 1967, new coins were introduced due to a considerable fall in the value of the króna. 10 króna coins were introduced in that year, followed by 50 eyrir and 5 króna pieces in 1969 and 50 króna pieces in 1970.
In 1929, another bank, the Landsbanki Íslands took over issuance of denominations of 5 krónur and above, with the Ríkissjóð Íslands continuing to issue 1 króna notes until 1947. The Landsbanki Íslands introduced 500 króna notes in 1935, followed by 25 and 1000 króna notes in 1957.
In 1961, the Seðlabanki Íslands
became the central bank of Iceland and started issuing paper money, in denominations of 10, 25, 100, 500, 1000 and 5000 krónur.
Technically, the króna is still composed of 100 aurar, although, in practice, coins less than one króna have not circulated for many years. In September 2002, Davíð Oddsson
, the Icelandic Prime Minister
at the time, signed two regulations decreeing that all monetary amounts on invoices and financial claims should be stated and paid in whole krónur only and that coins with a value of less than one króna should be withdrawn from circulation. Aurar are still used for pricing certain shares on the Iceland Stock Exchange
.
100, 500, and 1000 krónur were reissued in 1994 on the law of 5 May 1986. In the following year, a new denomination 2000 krónur was issued for the very first time. The 2000 króna note is subtly different from the other notes. For example, the underprint pattern extends all the way upward and downward, while the other denominations had white margins on every side. The Arabic numeral
2000 is printed in multi color on 3 of the 4 instances. And the numeral 2000 on the lower left corner of reverse is vertical. The "shadow" of the numeral is printed with SÍ in microprint.
The 22 May 2001 series saw more changes than mere date update. The underprint and microprint change of the 2000 króna note were incorporated. The 1000 and 5000 krónur notes also received metallic foils next to the portrait.
Notes of 100 krónur or less no longer circulate, as they have been withdrawn by the central bank. As of 2006, the vast majority of banknotes in circulation are of the 500, 1000, 2000 and 5000 denominations (these generally being the only notes dispensed in ATMs, for example).
and does not use the euro
.
The Icelandic currency is a low-volume world currency, strongly managed by its central bank, with a high degree of volatility against the US and Canadian dollar
s, and against the currencies of the other Nordic countries (Swedish krona
, Norwegian krone
, Danish krone
, and euro). For example, during the first half of 2006, the Icelandic króna ranged between 50 and 80 per US$. Prior to the currency's collapse in October 2008, the króna was considered overvalued; in July 2008, a Big Mac
cost the equivalent of nearly six US dollars, versus $3.57 in the US.
At most shops electronic payment is accepted. Other currencies are very rarely accepted in Iceland. A notable exception is Keflavík International Airport
(which has many transfer passengers), where the US dollar, euro and some other currencies are accepted by all merchants. Certain stores in downtown Reykjavík accept some foreign currencies.
The overall level of technological sophistication is noteworthy in Iceland. Iceland has, for example, among the highest per capita computer usage in the world (far higher than the UK or US). The saturation of technology in Iceland has had ramifications in the monetary system; a very large percentage of all transactions in Iceland take place through electronic forms of payment, such as debit and credit cards and online bank transfers. It is also worth noting that the value of banknotes is relatively small, e.g., the largest denomination banknote is the 5000 króna note, while a mid-range dinner for two in Iceland, without drinks or dessert, can easily exceed 5000 krónur (ca. EUR 28 in June 2009). This effect may accelerate the Icelandic move towards a semi-cashless economy.
loan. However as of January 2009 the krona was still not being traded regularly, with the ECB reference rate being set only intermittently, the last time on December 3, 2008 at 290 ISK per euro.
The Icelandic krona similarly fell in value against the US dollar, from c. 50 to 80 per dollar to about 110-115 per dollar; by mid-November 2008 it had continued its slide to c. 135 to the dollar. As of April 2, 2009, the value hovered around 119 per US dollar, roughly maintaining that value over the next two years with March 23, 2011, prices around 114 per US dollar. Previously high costs for foreign tourists thereby dropped, which Iceland's tourism industry hopes to exploit.
Because of the volatility between the euro
and the króna, former Foreign Minister
Valgerður Sverrisdóttir
considered the idea that Iceland might dollarize itself into the eurozone
without joining the European Union.
The opinion regarding the euro is mixed among Icelanders. An opinion poll on the matter of Iceland joining the European Union released on September 11, 2007, by Capacent Gallup showed that 53% of respondents were in favour of adopting the euro
, 37% opposed and 10% undecided. Another poll produced for the Icelandic newspaper Fréttablaðið and released on 30 September 2007 showed 56% opposed to euro adoption and 44% in favour. In January 2008, a poll by the Icelandic Chamber of Commence put support for Iceland to abandon the króna for another currency at 63%. Additionally, a number of companies in Iceland such as Ossur
, have started to pay their employees in euros or US dollars, mainly due the high inflation and high volatility.
The 2008/2009 financial crisis prompted further calls for Iceland to join the eurozone. In January 2009, one senior Icelandic official stated that due to the crisis "the krona is dead. We need a new currency. The only serious option is the euro." In March 2009, a report by Iceland's Minister for Foreign Affairs, Össur Skarphédinsson, considered three options: retaining the krona, adopting the euro without joining the EU and adopting the euro through EU membership. The report recommended the third option.
An economic study of the impact of the adoption of the euro by Iceland found that "the Icelandic krona acts as a barrier to international trade, and that by joining the EU and adopting the euro, Icelandic trade could increase by 60%".
In July 2009, the Alþingi narrowly voted to apply for EU membership (see Accession of Iceland to the European Union).
Currency sign
A currency sign is a graphic symbol used as a shorthand for a currency's name, especially in reference to amounts of money. They typically employ the first letter or character of the currency, sometimes with minor changes such as ligatures or overlaid vertical or horizontal bars...
: kr; code
ISO 4217
ISO 4217 is a standard published by the International Standards Organization, which delineates currency designators, country codes , and references to minor units in three tables:* Table A.1 – Current currency & funds code list...
: ISK) is the currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
of Iceland
Iceland
Iceland , described as the Republic of Iceland, is a Nordic and European island country in the North Atlantic Ocean, on the Mid-Atlantic Ridge. Iceland also refers to the main island of the country, which contains almost all the population and almost all the land area. The country has a population...
. The króna is technically subdivided into 100 aurar (singular eyrir), but in practice this subdivision is no longer used.
The word króna, meaning "crown", is related to that of other Nordic
Nordic countries
The Nordic countries make up a region in Northern Europe and the North Atlantic which consists of Denmark, Finland, Iceland, Norway and Sweden and their associated territories, the Faroe Islands, Greenland and Åland...
currencies (such as the Danish krone
Danish krone
The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre...
, Swedish krona
Swedish krona
The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value...
and Norwegian krone
Norwegian krone
The krone is the currency of Norway and its dependent territories. The plural form is kroner . It is subdivided into 100 øre. The ISO 4217 code is NOK, although the common local abbreviation is kr. The name translates into English as "crown"...
) and to the Latin word corona ("crown"). The name "Icelandic crown" is sometimes used, for example in the financial markets.
First króna, 1874–1981
The Danish kroneDanish krone
The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre...
was introduced to Iceland in 1874, replacing the earlier Danish currency, the rigsdaler
Danish rigsdaler
The rigsdaler was the name of several currencies used in Denmark until 1873. The similarly named Reichsthaler, riksdaler and rijksdaalder were used in Germany and Austria-Hungary, Sweden and the Netherlands, respectively....
. In 1885, Iceland began issuing its own banknotes.
The Icelandic króna separated from the Danish krone
Danish krone
The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre...
after the dissolution of the Scandinavian Monetary Union
Scandinavian Monetary Union
The Scandinavian Monetary Union was a monetary union formed by Sweden and Denmark on May 5, 1873, by fixing their currencies against gold at par to each other...
at the start of World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
and Icelandic autonomy from Denmark
Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...
in 1918. The first coins were issued in 1922.
Coins
Iceland's first coins were 10 and 25 eyrir pieces introduced in 1922. These were followed in 1925 by denominations 1 and 2 króna pieces and in 1926 by 1, 2 and 5 eyrir pieces. In 1946, the coins' designs were altered to remove the royal monogram (CXR), following Icelandic independence from Denmark in 1944, when Denmark (but not Iceland) was occupied by Nazi GermanyNazi Germany
Nazi Germany , also known as the Third Reich , but officially called German Reich from 1933 to 1943 and Greater German Reich from 26 June 1943 onward, is the name commonly used to refer to the state of Germany from 1933 to 1945, when it was a totalitarian dictatorship ruled by...
.
Starting in 1967, new coins were introduced due to a considerable fall in the value of the króna. 10 króna coins were introduced in that year, followed by 50 eyrir and 5 króna pieces in 1969 and 50 króna pieces in 1970.
Banknotes
The first notes issued in 1885 by the Landssjóð Íslands were in denominations of 5, 10 and 50 krónur. In 1904, the Bank of Iceland (Íslands Banki) took over note production and introduced 100 króna notes. In 1921, the Ríkissjóður Íslands began issuing paper money, with notes for 1, 5, 10 and 50 krónur.In 1929, another bank, the Landsbanki Íslands took over issuance of denominations of 5 krónur and above, with the Ríkissjóð Íslands continuing to issue 1 króna notes until 1947. The Landsbanki Íslands introduced 500 króna notes in 1935, followed by 25 and 1000 króna notes in 1957.
In 1961, the Seðlabanki Íslands
Central Bank of Iceland
The Central Bank of Iceland is the central bank or reserve bank of Iceland. It has served in this capacity since 1961, when it was created by an act of the Alþingi out of the central banking department of Landsbanki Íslands, which had had the sole right of note issuance since 1927 and had...
became the central bank of Iceland and started issuing paper money, in denominations of 10, 25, 100, 500, 1000 and 5000 krónur.
Second króna, 1981–present
In 1981, the Icelandic króna was revalued, with 100 old krónur (ISJ) being worth 1 new króna (ISK).Technically, the króna is still composed of 100 aurar, although, in practice, coins less than one króna have not circulated for many years. In September 2002, Davíð Oddsson
Davíð Oddsson
Davíð Oddsson is an Icelandic politician and the longest-serving Prime Minister of Iceland, holding office from 1991 to 2004. He also served as Foreign Minister from 2004 to 2005. Previously, he was Mayor of Reykjavík from 1982 to 1991, and he chaired the board of governors of the Central Bank of...
, the Icelandic Prime Minister
Prime Minister of Iceland
The Prime Minister of Iceland is Iceland's head of government. The prime minister is appointed formally by the President and exercises executive authority along with the cabinet subject to parliamentary support....
at the time, signed two regulations decreeing that all monetary amounts on invoices and financial claims should be stated and paid in whole krónur only and that coins with a value of less than one króna should be withdrawn from circulation. Aurar are still used for pricing certain shares on the Iceland Stock Exchange
Iceland Stock Exchange
NASDAQ OMX Iceland or ICEX was established in 1985 as a joint venture of several banks and brokerage firms on the initiative of the central bank. Trading began in 1986 in Icelandic government bonds, and trading in equities began in 1990. Equities trading increased rapidly thereafter...
.
Coins
In 1981, coins were introduced in denominations of 5, 10 and 50 aurar, 1 and 5 krónur. These were followed by 10 króna pieces in 1984, 50 krónur in 1987 and 100 krónur in 1995. As of 1 October 2003, Icelandic banks no longer accept the 5, 10 and 50 aurar coins.Banknotes
Icelandic banknotes are printed with the dates from which the legal basis of the currency derives. In 1981, notes were issued in denominations of 10, 50, 100 and 500 krónur on the law of 29 March 1961. 1000 krónur notes were introduced in 1984, followed by 5000 krónur notes in 1986 with the same law.100, 500, and 1000 krónur were reissued in 1994 on the law of 5 May 1986. In the following year, a new denomination 2000 krónur was issued for the very first time. The 2000 króna note is subtly different from the other notes. For example, the underprint pattern extends all the way upward and downward, while the other denominations had white margins on every side. The Arabic numeral
Arabic numerals
Arabic numerals or Hindu numerals or Hindu-Arabic numerals or Indo-Arabic numerals are the ten digits . They are descended from the Hindu-Arabic numeral system developed by Indian mathematicians, in which a sequence of digits such as "975" is read as a numeral...
2000 is printed in multi color on 3 of the 4 instances. And the numeral 2000 on the lower left corner of reverse is vertical. The "shadow" of the numeral is printed with SÍ in microprint.
The 22 May 2001 series saw more changes than mere date update. The underprint and microprint change of the 2000 króna note were incorporated. The 1000 and 5000 krónur notes also received metallic foils next to the portrait.
Notes of 100 krónur or less no longer circulate, as they have been withdrawn by the central bank. As of 2006, the vast majority of banknotes in circulation are of the 500, 1000, 2000 and 5000 denominations (these generally being the only notes dispensed in ATMs, for example).
| Law of 29 March 1961 Series | ||||||||
|---|---|---|---|---|---|---|---|---|
| Image | Value | Dimensions | Main Colour | Description | Date of issue | |||
| Obverse | Reverse | Obverse | Reverse | Watermark | ||||
 |
10 krónur | 130 × 70 mm | Blue | Arngrímur Jónsson the Learned Arngrímur Jónsson Arngrímur Jónsson the Learned was an Icelandic scholar and an apologist. His father was Jón Jónsson, who died in 1591... |
Old Icelandic household scene based on Auguste Mayer's drawing | Jón Sigurðsson Jón Sigurðsson Jón Sigurðsson was the leader of the 19th century Icelandic independence movement.Born at Hrafnseyri, near Arnarfjörður in the Westfjords area of Iceland, he was the son of a pastor, Sigurður Jónsson. He moved to Copenhagen, Denmark, in 1833 to study grammar and history at the university there... |
1981 | |
| 50 krónur | 135 × 70 mm | Brown | Guðbrandur Þorláksson Guðbrandur Þorláksson Guðbrandur Þorláksson was an Icelandic mathematician, cartographer and clergyman.He studied at the cathedral school in Hólar and then at the University of Copenhagen. He and was successively rector of the school at Skálholt and minister at historic Breiðabólstaður in Vesturhóp... |
Printers at work in the 16th century | ||||
 |
100 krónur | 140 × 70 mm | Green | Árni Magnússon Árni Magnússon Árni Magnússon was an Icelandic scholar and collector of manuscripts. He assembled the Arnamagnæan Manuscript Collection.-Life:... |
Monastic scribe | |||
| 500 krónur | 145 × 70 mm | Red | Jón Sigurðsson Jón Sigurðsson Jón Sigurðsson was the leader of the 19th century Icelandic independence movement.Born at Hrafnseyri, near Arnarfjörður in the Westfjords area of Iceland, he was the son of a pastor, Sigurður Jónsson. He moved to Copenhagen, Denmark, in 1833 to study grammar and history at the university there... |
Jón at his writing desk | ||||
| 1000 krónur | 150 × 70 mm | Purple | Brynjólfur Sveinsson Brynjólfur Sveinsson Brynjólfur Sveinsson served as the Lutheran Bishop of the see of Skálholt in Iceland. His main influence has been on modern knowledge of Old Norse literature. He is currently pictured on the Icelandic 1000 krónur bill.... |
Brynjólfskirkja church (1650–1802) at Skálholt Skálholt Skálholt is an historical site situated in the south of Iceland at the river Hvítá.-History:Skálholt was, through eight centuries, one of the most important places in Iceland. From 1056 until 1785, it was one of Iceland's two episcopal sees, along with Hólar, making it a cultural and political... |
1984 | |||
| 5000 krónur | 155 × 70 mm | Blue-green multicolour | Ragnheiður Jónsdóttir Ragnheiður Jónsdóttir Ragnheiður Jónsdóttir was the daughter of the Icelandic priest Jón Arason and his wife Hólmfríður Sigurðardóttir. She was one of twelve children and was an active seamstress. She taught this skill actively. Ragnheiður became the wife of two consecutive bishops in the Hólar see -- Gísli... |
Ragnheiður instructing two girls in embroidery | 1986 | |||
| Law of 5 May 1986 Series | ||||||||
| 100 krónur | As previous | 1994 | ||||||
| 500 krónur | ||||||||
| 1000 krónur | ||||||||
| 2000 krónur | 150 × 70 mm | Multicolour | Jóhannes Kjarval | Kjarval's painting Yearning for Flight and his drawing Woman and Flowers | Jón Sigurðsson Jón Sigurðsson Jón Sigurðsson was the leader of the 19th century Icelandic independence movement.Born at Hrafnseyri, near Arnarfjörður in the Westfjords area of Iceland, he was the son of a pastor, Sigurður Jónsson. He moved to Copenhagen, Denmark, in 1833 to study grammar and history at the university there... |
1995 | ||
| Law of 22 May 2001 Series | ||||||||
| 500 krónur | As previous, but the underprint design extends upward and downward to fill the margin | October 2005 | ||||||
| 1000 krónur | November 2004 | |||||||
| 5000 krónur | November 2003 | |||||||
Currency issues
Iceland is not currently a member of the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
and does not use the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
.
The Icelandic currency is a low-volume world currency, strongly managed by its central bank, with a high degree of volatility against the US and Canadian dollar
Canadian dollar
The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...
s, and against the currencies of the other Nordic countries (Swedish krona
Swedish krona
The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value...
, Norwegian krone
Norwegian krone
The krone is the currency of Norway and its dependent territories. The plural form is kroner . It is subdivided into 100 øre. The ISO 4217 code is NOK, although the common local abbreviation is kr. The name translates into English as "crown"...
, Danish krone
Danish krone
The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre...
, and euro). For example, during the first half of 2006, the Icelandic króna ranged between 50 and 80 per US$. Prior to the currency's collapse in October 2008, the króna was considered overvalued; in July 2008, a Big Mac
Big Mac index
The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries...
cost the equivalent of nearly six US dollars, versus $3.57 in the US.
At most shops electronic payment is accepted. Other currencies are very rarely accepted in Iceland. A notable exception is Keflavík International Airport
Keflavík International Airport
-Cargo airlines:-Ground transport:Transport between the airport and Reykjavik city is by road only. The distance is 50 km. A new fast freeway was opened 2008. The buses have a timetable adapted to the flight schedule. They go to and from the Reykjavik bus terminal, taking around 45 minutes...
(which has many transfer passengers), where the US dollar, euro and some other currencies are accepted by all merchants. Certain stores in downtown Reykjavík accept some foreign currencies.
The overall level of technological sophistication is noteworthy in Iceland. Iceland has, for example, among the highest per capita computer usage in the world (far higher than the UK or US). The saturation of technology in Iceland has had ramifications in the monetary system; a very large percentage of all transactions in Iceland take place through electronic forms of payment, such as debit and credit cards and online bank transfers. It is also worth noting that the value of banknotes is relatively small, e.g., the largest denomination banknote is the 5000 króna note, while a mid-range dinner for two in Iceland, without drinks or dessert, can easily exceed 5000 krónur (ca. EUR 28 in June 2009). This effect may accelerate the Icelandic move towards a semi-cashless economy.
2008 financial crisis
In October 2008, the effects of the 2007/08 global financial crisis brought about a collapse of the Icelandic banking sector. The value of the Icelandic króna plummeted, and on 7 October 2008 the Icelandic Central Bank attempted to peg it at 131 against the euro. This peg was abandoned the next day. The króna later fell to 340 against the euro before trade in the currency was suspended (by comparison, the rate at the start of 2008 was about 90 krónur to the euro). After a period of tentative, very low-volume international trading in the króna, activity had been expected to pick up again throughout November 2008, albeit still with low liquidity, as Iceland secured an International Monetary FundInternational Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
loan. However as of January 2009 the krona was still not being traded regularly, with the ECB reference rate being set only intermittently, the last time on December 3, 2008 at 290 ISK per euro.
The Icelandic krona similarly fell in value against the US dollar, from c. 50 to 80 per dollar to about 110-115 per dollar; by mid-November 2008 it had continued its slide to c. 135 to the dollar. As of April 2, 2009, the value hovered around 119 per US dollar, roughly maintaining that value over the next two years with March 23, 2011, prices around 114 per US dollar. Previously high costs for foreign tourists thereby dropped, which Iceland's tourism industry hopes to exploit.
Iceland and the euro
Theoretically the adoption of the euro could have several advantages. Adopting a stronger currency may help Iceland to "avoid the turbulence surrounding speculations in international financial markets". In addition, Icelandic economists listed several arguments in favour of the euro before the crisis. "In terms of growth potentials and welfare, the euro could be expected to bring lower long-term interest rates [...]. This would of course increase capital investment and labour productivity. The euro might lower consumer prices by facilitating a comparison with other euro countries."Because of the volatility between the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
and the króna, former Foreign Minister
Minister for Foreign Affairs of Iceland
The Icelandic Ministry for Foreign Affairs or the Icelandic Ministry for Foreign Affairs and External Trade is a cabinet-level ministry responsible for the country's foreign relations and defence...
Valgerður Sverrisdóttir
Valgerður Sverrisdóttir
Valgerður Sverrisdóttir is an Icelandic politician. She has been member of the Althing for the Progressive Party for the Northeast constituency since 1987 and was Chairman of the Progressive Party parliamentary group from 1995 to 1999, Minister of Industry and Commerce from 1999 to 2006, and...
considered the idea that Iceland might dollarize itself into the eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
without joining the European Union.
The opinion regarding the euro is mixed among Icelanders. An opinion poll on the matter of Iceland joining the European Union released on September 11, 2007, by Capacent Gallup showed that 53% of respondents were in favour of adopting the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
, 37% opposed and 10% undecided. Another poll produced for the Icelandic newspaper Fréttablaðið and released on 30 September 2007 showed 56% opposed to euro adoption and 44% in favour. In January 2008, a poll by the Icelandic Chamber of Commence put support for Iceland to abandon the króna for another currency at 63%. Additionally, a number of companies in Iceland such as Ossur
Ossur
Össur is a company making non-invasive orthopaedics. It makes and sells bracing and support products, compression therapy, and prosthetics. The company’s headquarters are in Reykjavík, Iceland. The company also has extensive operations in the Americas, Europe, and Asia, with numerous distributors...
, have started to pay their employees in euros or US dollars, mainly due the high inflation and high volatility.
The 2008/2009 financial crisis prompted further calls for Iceland to join the eurozone. In January 2009, one senior Icelandic official stated that due to the crisis "the krona is dead. We need a new currency. The only serious option is the euro." In March 2009, a report by Iceland's Minister for Foreign Affairs, Össur Skarphédinsson, considered three options: retaining the krona, adopting the euro without joining the EU and adopting the euro through EU membership. The report recommended the third option.
An economic study of the impact of the adoption of the euro by Iceland found that "the Icelandic krona acts as a barrier to international trade, and that by joining the EU and adopting the euro, Icelandic trade could increase by 60%".
In July 2009, the Alþingi narrowly voted to apply for EU membership (see Accession of Iceland to the European Union).