Icelandic economists urge their country to adopt Canada's currency

[petros]

Will Iceland Switch to the Canadian Dollar?

A push is underway for Iceland to switch its currency from the oft-troubled krona to the Canadian dollar, according to a report in Canadian Business. Despite bouncing back considerably from the financial crisis of 2008, Iceland is considering new strategies as it continues to struggle with high unemployment, a high office vacancy rate and a weakened currency.

The krona has been problematic for years, subject to frequent devaluations and massive swings by speculators. Its value shot up 87 percent between 2001 and 2007 as interest rates surged, attracting speculators who would borrow money in low-yield currencies, invest it in the high-yield krona, and then profit on the carry trade. But after Iceland’s top banks were unable to meet obligations and collapsed in 2008, the speculators jumped ship and the krona plummeted 92 percent.

Iceland has begun the application process to enter the European Union, a risky and unpopular move given the eurozone debt crisis and the fear that Iceland could lose much of its autonomy. In response, a group of Icelandic academics, economists and business people, as well as the Progressive Party, have begun exploring the idea of a switch to the Canadian dollar.

Supporters of the switch cite the stable Canadian banking system and currency. Additionally, the two nations’ economies are similar in that both are centered around natural resources. Iceland also enjoys a strong trade partnership with Canada.

But there is a downside, as adopting another country’s currency would give Iceland no power over its monetary policy at times, such as when economic stimulus is necessary. Some critics also feel that support for adopting the CAD has more to do with Iceland’s cozy relationship with Canada, rather than for any sound economic reasons. For the moment, the Icelandic government is not backing off from its intentions to complete the EU application process. The Progressive Party, however, is hoping to gain some support from Canada.

http://www.afponline.org/Article_Detail.aspx?id=10737419422

Whaddaya figure?

 

[Colpy]

Will Iceland Switch to the Canadian Dollar?

A push is underway for Iceland to switch its currency from the oft-troubled krona to the Canadian dollar, according to a report in Canadian Business. Despite bouncing back considerably from the financial crisis of 2008, Iceland is considering new strategies as it continues to struggle with high unemployment, a high office vacancy rate and a weakened currency.

The krona has been problematic for years, subject to frequent devaluations and massive swings by speculators. Its value shot up 87 percent between 2001 and 2007 as interest rates surged, attracting speculators who would borrow money in low-yield currencies, invest it in the high-yield krona, and then profit on the carry trade. But after Iceland’s top banks were unable to meet obligations and collapsed in 2008, the speculators jumped ship and the krona plummeted 92 percent.

Iceland has begun the application process to enter the European Union, a risky and unpopular move given the eurozone debt crisis and the fear that Iceland could lose much of its autonomy. In response, a group of Icelandic academics, economists and business people, as well as the Progressive Party, have begun exploring the idea of a switch to the Canadian dollar.

Supporters of the switch cite the stable Canadian banking system and currency. Additionally, the two nations’ economies are similar in that both are centered around natural resources. Iceland also enjoys a strong trade partnership with Canada.

But there is a downside, as adopting another country’s currency would give Iceland no power over its monetary policy at times, such as when economic stimulus is necessary. Some critics also feel that support for adopting the CAD has more to do with Iceland’s cozy relationship with Canada, rather than for any sound economic reasons. For the moment, the Icelandic government is not backing off from its intentions to complete the EU application process. The Progressive Party, however, is hoping to gain some support from Canada.

Will Iceland Switch to the Canadian Dollar?

Whaddaya figure?

Are they LOONEY???

Sorry.

Sorry.

I'm very tired.

 

[petros]

When you see double that's a Toonie and it's time to hit the sack.

Who cares if they are loonie it's great for us.

 

[Spade]

I am all for closer relations with Iceland. We Canadians need a safe, friendly winter destination where we can escape from the cold.

 

[petros]

I am all for closer relations with Iceland. We Canadians need a safe, friendly winter destination where we can escape from the cold.

They have the potential to be major food suppliers. Geothermal lit and heated greenhouses could replace the doomed fishing industry.

Growing food makes more sense than smelting African bauxite into aluminum with all that energy.

 

[Machjo]

Will Iceland Switch to the Canadian Dollar?

A push is underway for Iceland to switch its currency from the oft-troubled krona to the Canadian dollar, according to a report in Canadian Business. Despite bouncing back considerably from the financial crisis of 2008, Iceland is considering new strategies as it continues to struggle with high unemployment, a high office vacancy rate and a weakened currency.

The krona has been problematic for years, subject to frequent devaluations and massive swings by speculators. Its value shot up 87 percent between 2001 and 2007 as interest rates surged, attracting speculators who would borrow money in low-yield currencies, invest it in the high-yield krona, and then profit on the carry trade. But after Iceland’s top banks were unable to meet obligations and collapsed in 2008, the speculators jumped ship and the krona plummeted 92 percent.

Iceland has begun the application process to enter the European Union, a risky and unpopular move given the eurozone debt crisis and the fear that Iceland could lose much of its autonomy. In response, a group of Icelandic academics, economists and business people, as well as the Progressive Party, have begun exploring the idea of a switch to the Canadian dollar.

Supporters of the switch cite the stable Canadian banking system and currency. Additionally, the two nations’ economies are similar in that both are centered around natural resources. Iceland also enjoys a strong trade partnership with Canada.

But there is a downside, as adopting another country’s currency would give Iceland no power over its monetary policy at times, such as when economic stimulus is necessary. Some critics also feel that support for adopting the CAD has more to do with Iceland’s cozy relationship with Canada, rather than for any sound economic reasons. For the moment, the Icelandic government is not backing off from its intentions to complete the EU application process. The Progressive Party, however, is hoping to gain some support from Canada.

Will Iceland Switch to the Canadian Dollar?

Whaddaya figure?

Iceland adopting the CAD would certainly be to Canada's advantage, as Canada would suddenly have some control of Iceland's economy, which would not be reciprocal.

While currency union certainly has its advantages, if we're looking at a mutually equally beneficial relationship, we would want the countries involved to share a common currency, not just one country using another's. For example, Iceland could negotiate with Canada to establish a common North American currency shared by both countries together as equal partners, or join the Euro which is already shared on an equal footing by all Eurozone countries. Add to that that with what the Eurozone has learnt from this experience, the Euro will come out of this crisis with much more discipline backing it.

 

[petros]

Iceland adopting the CAD would certainly be to Canada's advantage, as Canada would suddenly have some control of Iceland's economy, which would not be reciprocal.

How would we have control? Currency is bought and sold on the open market.

 

[Machjo]

When you see double that's a Toonie and it's time to hit the sack.

Who cares if they are loonie it's great for us.

Great for us, and uncertain for them. I could see currency where all partners involved are equal partners.

 

[petros]

Why uncertain? If we are bold enough our dollar will remain strong and unsinkable. Buying our dollar means investing in Canada. We all know we are number 2 for oil reserves but Canada is #1 in a lot of other naturals and renewables that few ever consider when thinking of the Canadian economy.

 

[Machjo]

How would we have control? Currency is bought and sold on the open market.

Imagine we decided to print some money to pay off our debt. The good news for us would be that Iceland would be swallowing up some of that inflation too to pay off our debt, but reaping no benefit from it. Clearly a disadvantage for Iceland if Canada controls the printing presses.

Why uncertain? If we are bold enough our dollar will remain strong and unsinkable. Buying our dollar means investing in Canada. We all know we are number 2 for oil reserves but Canada is #1 in a lot of other naturals and renewables that few ever consider when thinking of the Canadian economy.

Sur beneficial for us, still uncertain for Iceland. you just pointed out ways in which it would be beneficial for us.

 

[Cannuck]

I think we should ask Iceland if it wants to become a Canadian province. It would make a great base for us to launch our attacks against Europe

 

[Machjo]

I think we should ask Iceland if it wants to become a Canadian province.

I would be willing to make such an offer to Iceland, though I doubt it would accept, especially with all the archaisms of our constitution.

As for Iceland simply accepting our currency, i don't see why it would want to do that. Sharing a common currency, yes, but just adopting another country's? Risky.


It would make a great base for us to launch our attacks against Europe[/QUOTE]

 

[petros]

Buying power. If your's doesn't have it, get one that does.

 

[taxslave]

Closer ties to Iceland would give us better control over the arctic. Other than that I don't see any benefit to Canada.

 

[Machjo]

Closer ties to Iceland would give us better control over the arctic. Other than that I don't see any benefit to Canada.

What? We'll threaten to print more money unless iceland abandons any claims to the Arctic?

 

[taxslave]

What? We'll threaten to print more money unless iceland abandons any claims to the Arctic?

No, we have a common interest there. The US and some other countries think they own the area by virtue of having armies.

 

[petros]

Closer ties to Iceland would give us better control over the arctic. Other than that I don't see any benefit to Canada.

To use our currency they have to buy our currency.

 

[ironsides]

They could just use the Canadian dollar as El Salvador and Panama use the American dollar. Officially we have no control over what they accepts their national currency. They as Petros said just have to buy Canadian currency.

 

[Locutus]

Let's do the Turks and Caicos first eh. ;-)

 

[coldstream]

With the Euro on its deathbed, hasn't anyone realized that common currencies are prescription for economic fiasco.

Iceland has made a brave stand against the IMF by refusing its demands for austerity. It needs to back that up by re-establishing a sovereign national currency.

And don't give that drooling dolt Harper any ideas.. Canada needs to do the same thing... resign the IMF, ditch monetarism and the floating currency, and dump Free Trade.. that's our only hope.