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The króna or krona (sometimes called Icelandic crown;
sign A sign is an object, quality, event, or entity whose presence or occurrence indicates the probable presence or occurrence of something else. A natural sign bears a causal relation to its object—for instance, thunder is a sign of storm, or ...
: kr;
code In communications and information processing, code is a system of rules to convert information—such as a letter, word, sound, image, or gesture—into another form, sometimes shortened or secret, for communication through a communication ...
: ISK) is the
currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general d ...
of
Iceland Iceland ( is, Ísland; ) is a Nordic island country in the North Atlantic Ocean and in the Arctic Ocean. Iceland is the most sparsely populated country in Europe. Iceland's capital and largest city is Reykjavík, which (along with its ...
. Iceland is the second-smallest country by population, after the
Seychelles Seychelles (, ; ), officially the Republic of Seychelles (french: link=no, République des Seychelles; Creole: ''La Repiblik Sesel''), is an archipelagic state consisting of 115 islands in the Indian Ocean. Its capital and largest city, ...
, to have its own currency and monetary policy.


Name

Like the Nordic currencies (such as the Danish krone,
Swedish krona The krona (; plural: ''kronor''; sign: kr; code: SEK) is the official currency of the Kingdom of Sweden. 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 b ...
and
Norwegian krone The krone (, abbreviation: kr (also NKr for distinction); code: NOK), plural ''kroner'', is currency of the Kingdom of Norway (including Svalbard). Traditionally known as the Norwegian crown in English. It is nominally subdivided into 100 ''ør ...
) that participated in the historical
Scandinavian Monetary Union __NOTOC__ The Scandinavian Monetary Union was a monetary union formed by Denmark and Sweden on 5 May 1873, with Norway joining in 1875. It established a common currency unit, the krone/krona, based on the gold standard. It was one of the few tan ...
, the name ''króna'' (meaning ''crown'') comes from the
Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally a dialect spoken in the lower Tiber area (then known as Latium) around present-day Rome, but through ...
word ''
corona Corona (from the Latin for 'crown') most commonly refers to: * Stellar corona, the outer atmosphere of the Sun or another star * Corona (beer), a Mexican beer * Corona, informal term for the coronavirus SARS-CoV-2, which causes the COVID-19 di ...
'' ("crown"). The name "Icelandic crown" is sometimes used alternatively, for example in the financial markets.


First krona, 1874–1981

The Danish krone was introduced to Iceland in 1874, replacing the earlier Danish currency, the rigsdaler. In 1885, Iceland began issuing its own banknotes. The Icelandic krona separated from the Danish krone after the dissolution of the
Scandinavian Monetary Union __NOTOC__ The Scandinavian Monetary Union was a monetary union formed by Denmark and Sweden on 5 May 1873, with Norway joining in 1875. It established a common currency unit, the krone/krona, based on the gold standard. It was one of the few tan ...
at the start of World War I and Icelandic sovereignty from
Denmark ) , song = ( en, "King Christian stood by the lofty mast") , song_type = National and royal anthem , image_map = EU-Denmark.svg , map_caption = , subdivision_type = Sovereign state , subdivision_name = Danish Realm, Kingdom of Denmark ...
in 1918. The first coins were issued in 1922. Iceland was forced to devalue the Icelandic krona in 1922, by 23% against the Danish krone, which saw the beginning of an independent monetary policy in Iceland, and was to be the first of many subsequent devaluations of the krona. In 1925 the krona was pegged to the
British pound Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO 4217, ISO code: GBP) is the currency of the United Kingdom and nine of #Crown Dependencies and British Overseas Territories, its associated territori ...
for the next 14 years until the spring of 1939. Later in 1939 the currency was pegged to the
US Dollar The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
, which was maintained until 1949.


Coins

Iceland's first coins were 10 and 25 aurar pieces introduced in 1922. These were followed in 1925 by 1 krona and 2 krona pieces and in 1926 by 1, 2 and 5 aurar pieces. In 1946, the coins' designs were altered to remove the royal monogram (CXR), following Icelandic independence from Denmark in 1944. Starting in 1967, new coins were introduced due to a considerable fall in the value of the krona. 10 krona coins were introduced in that year, followed by 50 aurar and 5 krona pieces in 1969 and 50 krona pieces in 1970.


Banknotes

The first notes issued in 1885 by the ''Landssjóður Íslands'' were in denominations of 5, 10 and 50 krona. In 1904, the Bank of Iceland (''Íslands Banki'') took over note production and introduced 100 krona notes. In 1921, the ''Ríkissjóður Íslands'' began issuing paper money, with notes for 1, 5, 10 and 50 krona. In 1928, another bank, the '' Landsbanki Íslands'', took over issuance of denominations of 5 krona and above, with the ''Ríkissjóður Íslands'' continuing to issue 1 krona notes until 1947. The Landsbanki Íslands introduced 500 krona notes in 1935, followed by 25 and 1000 krona 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, and 500 krona. They were manufactured in England by
De la Rue De La Rue plc (, ) is a British company headquartered in Basingstoke, England, that designs and produces banknotes, secure polymer substrate and banknote security features (including security holograms, security threads and security printe ...
.


Second krona, 1981–present

In 1981, the Icelandic krona was revalued, due to high inflation, with 100 old krona (ISJ) being worth 1 new krona (ISK) and a new 500 krona banknote was first put into circulation in 1981. The 1000 krona was put into circulation in 1984 and the 5000 krona in 1986. The 2000 krona banknote was put into circulation in 1995 but never became very popular. The 10,000 krona banknote was put into circulation in 2013. Coins of less than one krona have not circulated for many years. In September 2002, Davíð Oddsson, the Icelandic
Prime Minister A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister is ...
at the time, signed two regulations decreeing that all monetary amounts on invoices and financial claims should be stated and paid in whole krona only and that coins with a value of less than one krona should be withdrawn from circulation.


Coins

In 1981, coins were introduced in denominations of 5, 10 and 50 aurar ''(cents)'', 1 krona and 5 krona. These were followed by 10 krona pieces in 1984, 50 krona in 1987 and 100 krona in 1995. Since 2003, Icelandic banks no longer accept any coins denominated in aurar ''(cents)''.


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 krona based on the law of 29 March 1961. 1000 krona notes were introduced in 1984, followed by 5000 krona notes in 1986 with the same law. 100, 500, and 1000 krona notes were reissued in 1994 under the law of 5 May 1986. In the following year, a new denomination of 2000 krona was issued for the first time. The 2000 krona 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 number ''2000'' is printed in multi color for 3 of the 4 occurrences. 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 substantial changes. The underprint and microprint features of the 2000 krona note were extended to other denominations. The 1000 and 5000 krona notes also received metallic foils next to the portrait. In 2013, a new 10000 krona banknote was introduced. The face of natural scientist and poet Jónas Hallgrímsson appears on the bill, as well as the Eurasian golden plover. Notes of 100 krona or less are no longer in circulation, as they have been withdrawn by the central bank.


Issues affecting the Icelandic krona

Iceland is not a member of the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been ...
and does not use the
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union The European Union (EU) is a supranational political and economic union of member states that are located prim ...
. The Icelandic currency is a low-volume world currency, strongly managed by its central bank. Its value in terms of other currencies has historically been swift to change, for example against the US and
Canadian dollar The Canadian dollar (symbol: $; code: CAD; french: dollar canadien) is the currency of Canada. It is abbreviated with the dollar sign $, there is no standard disambiguating form, but the abbreviation Can$ is often suggested by notable style g ...
s, and the other Nordic currencies (
Swedish krona The krona (; plural: ''kronor''; sign: kr; code: SEK) is the official currency of the Kingdom of Sweden. 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 b ...
,
Norwegian krone The krone (, abbreviation: kr (also NKr for distinction); code: NOK), plural ''kroner'', is currency of the Kingdom of Norway (including Svalbard). Traditionally known as the Norwegian crown in English. It is nominally subdivided into 100 ''ør ...
, Danish krone), and the euro. For example, during the first half of 2006, the Icelandic krona ranged between 50 and 80 per US dollar. Prior to the currency's collapse in October 2008, the krona was considered overvalued. In most shops electronic payment is accepted. Other currencies are very rarely accepted in Iceland. A notable exception is
Keflavík International Airport Keflavík Airport ( is, Keflavíkurflugvöllur ) , also known as Reykjavík–Keflavík Airport, is the largest airport in Iceland and the country's main hub for international transportation. The airport is west of Keflavík and southwest of ...
(which has many transfer passengers), where the US dollar, euro and some other currencies are accepted by all merchants. Certain stores in central Reykjavík accept some foreign currencies. Iceland's per capita computer usage is among the highest 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 high proportion of payments in Iceland are made electronically, e.g. by debit or credit cards or online bank transfers. The largest denomination banknote, the 10000 krona note (around €83 in July 2017), has a relatively low value; therefore, most of Iceland's high value trades are done in electronic transfers and in other currencies.


2008 financial crisis

In October 2008, the
financial crisis of 2007–2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...
brought about a collapse of the Icelandic banking sector. The value of the Icelandic krona dropped, 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 krona later dropped again and to 340 against the euro before trade in the currency was suspended (by comparison, the rate at the start of 2008 was about 90 krona to the euro). After a period of tentative, very low-volume international trading in the krona, activity had been expected to pick up again throughout November 2008, albeit still with low liquidity, as Iceland secured an
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glob ...
loan. However, as of January 2009 the krona was still not being traded regularly, with the
European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important central ...
(ECB) reference rate being set only intermittently, the last time on 3 December 2008 at 290 krona per euro. The Icelandic krona similarly fell in value against the US dollar, from around 50 to 80 per dollar to about 110–115 per dollar; by mid-November 2008 it had continued to lower to 135 to the dollar. As of 2 April 2009, the value hovered around 119 per dollar, roughly maintaining that value over the next two years with 23 March 2011, prices around 114 per dollar. With this, the previously high costs for foreign traders and tourists dropped, which Iceland's trade and tourism industry undertook to exploit. In July 2008, a
Big Mac The Big Mac is a hamburger sold by the international fast food restaurant chain McDonald's. It was introduced in the Greater Pittsburgh area in 1967 and across the United States in 1968. It is one of the company's flagship products and signat ...
cost the equivalent of nearly US$6, versus $3.57 in the US.


Iceland and the euro

Theoretically, the adoption of the euro could have several advantages. Adopting what is perceived by some as a historically stronger currency might 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 and the krona, former
Foreign Minister A foreign affairs minister or minister of foreign affairs (less commonly minister for foreign affairs) is generally a cabinet minister in charge of a state's foreign policy and relations. The formal title of the top official varies between co ...
Valgerður Sverrisdóttir considered the idea that Iceland might dollarize itself into the
Eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU policie ...
without joining the European Union. Opinion regarding the euro is mixed among Icelanders. An opinion poll about Iceland joining the European Union released on 11 September 2007 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 Commerce put support for Iceland to abandon the krona for another currency at 63%. A number of companies in Iceland, such as Össur, have started to pay their employees in euros or US dollars, mainly due to the high inflation and high volatility. The 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 both as a barrier and buffer to international trade, and that by joining the EU and adopting the euro, Icelandic international trade might be 60% higher. In July 2009, the Alþingi (parliament) narrowly voted to apply for EU membership, but that application has been frozen since 2013 (see
accession of Iceland to the European Union Accession refers to the general idea of joining or adding to. It may also refer to: *Accession (property law) * Accession, the act of joining a treaty by a party that did not take part in its negotiations; see Vienna Convention on the Law of Trea ...
). In March 2015, Icelandic authorities announced by letter to the Presidency of the Council of the European Union that Iceland should not be seen as candidate state, and that there were no specific plans to continue any membership process. Leaders of the ruling government parties have also stated that the krona will remain as Iceland's currency for at least the foreseeable future.


Iceland and unilateral adoption of another currency

Some small countries such as
El Salvador El Salvador (; , meaning " The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras, on the northwest by Guatemala, and on the south by ...
,
Ecuador Ecuador ( ; ; Quechuan languages, Quechua: ''Ikwayur''; Shuar language, Shuar: ''Ecuador'' or ''Ekuatur''), officially the Republic of Ecuador ( es, República del Ecuador, which literally translates as "Republic of the Equator"; Quechuan ...
and
Montenegro ) , image_map = Europe-Montenegro.svg , map_caption = , image_map2 = , capital = Podgorica , coordinates = , largest_city = capital , official_languages = M ...
have unilaterally adopted the use of a more stable foreign currency as a means of controlling inflation. The cost of this is generally very high, as the adopting country loses all control over monetary policy, and all the benefits of
seignorage Seigniorage , also spelled seignorage or seigneurage (from the Old French ''seigneuriage'', "right of the lord (''seigneur'') to mint money"), is the difference between the value of money and the cost to produce and distribute it. The term can be ...
. A
currency board In public finance, a currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the excha ...
is a second tier solution, where the exchange rate of the currency is fixed to that of another country, or a "basket" of currencies. There was a discussion in 2012 about the feasibility of adopting a foreign currency. The idea of adopting the
Canadian dollar The Canadian dollar (symbol: $; code: CAD; french: dollar canadien) is the currency of Canada. It is abbreviated with the dollar sign $, there is no standard disambiguating form, but the abbreviation Can$ is often suggested by notable style g ...
was popular and the Canadian ambassador to Iceland stated that Iceland could adopt the currency if it so wished. Canada was favoured due to its northern geography and similar resource based economy, in addition to its relative economic stability. Arnór Sighvatsson, Deputy Governor of the Central Bank of Iceland, at a meeting of the Icelandic Federation of Labour on 10 January 2012, said: ::I am of the view that unilateral adoption of a foreign currency or a currency board could only be considered prudent if all of Iceland's largest banks were owned by a strong foreign bank with the financial strength to provide them with liquidity during times of distress. Second, unilateral adoption of another currency is a solution that is hardly worth considering unless EMU (
Economic and Monetary Union of the European Union The economic and monetary union (EMU) of the European Union is a group of policies aimed at converging the economies of member states of the European Union at three stages. There are three stages of the EMU, each of which consists of prog ...
) membership has been ruled out for the foreseeable future, as it entails extra cost of purchase of new base money for the banking system (generally in the range of 70–100 billion krona in recent years) and larger precautionary foreign exchange reserves (particularly if the banks are not foreign-owned). It would be pointless to pay that price for a few years' benefit, plus the seigniorage that would revert permanently to the ECB
European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important central ...
. Currencies other than the euro have also been mentioned. But considering the characteristics required of such a currency, there is no other that comes close to being as beneficial for Iceland as the euro is. , Icelandic authorities had no plans to adopt a foreign currency.


Exchange rate

* As of 1 August 2021, US$1 was worth 123.73 Icelandic krona.


See also

* Economy of Iceland *
Scandinavian Monetary Union __NOTOC__ The Scandinavian Monetary Union was a monetary union formed by Denmark and Sweden on 5 May 1873, with Norway joining in 1875. It established a common currency unit, the krone/krona, based on the gold standard. It was one of the few tan ...
* Auroracoin


Notes


References and sources

;References ;Sources * *


External links


Banknotes of Iceland: Icelandic Krona catalog


{{DEFAULTSORT:Icelandic Krona Krona, Icelandic 1874 introductions Krona