Monday, March 12, 2012

Iceland warms to Canadian Dollar

The Icelandic Krona seems to be ready to call it quits after 137 years, or at least, Icelanders seem ready to quit the Krona as their national currency.

Iceland's currency has been volatile since the 2008 economic crash, when the Krona lost more than 90% of it's value. Since then many politicians have talked of the unsustainablity  of the Krona and the need to adopt a new currency. The Prime Minister, Johanna Sigurdardottir, warning that the countries monetary system can't remain unchanged.

A recent poll in Iceland indicates up to 70% of the population supports adopting the Canadian dollar. In contrast, just over a quarter of the population (26.3% of the population) supports joining the European Union, while 56.2% wisely oppose membership in the crumbling union. Other currencies have also been considered, notably the Norwegian Krona and the Japanese Yen, but support for our Canadian dollar has been growing since the summer when Iceland's opposition Progressive Party first suggested the idea.

While adopting the Canadian dollar would grant Iceland a measure of economic stability, Canadian ambassador Alan Bones warns that it would mean handing over a measure of economic sovereignty  to Canada, and losing control of their own monetary policy.

The effects on Canada would be small, Iceland's economy is smaller than 1% of ours, little more than twice the size of Prince Edward Island's economy. But the adoption of our currency abroad would be a mark of national pride, and a sign of the continued economic health of our country, certainly nothing to scoff at.

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