SODOM & GOMORRAH: The first cracks begin to appear in the Eurozone; financially distraught Iceland considers adopting a new currency.
The Economist reports that Iceland is debating whether to move away from the krona and adopt a different currency. Canadians are likely to be thrilled by the idea, since the current proposal is to use the Canadian dollar (known as the Loonie). The move bolsters the Conservative government’s claim that the Canadian economy is one of the strongest in the world.
Alan Bones, Canada’s ambassador to Iceland said on March 2nd that his government was open to discussing the idea, yet thus far there has been a lack of real consideration for the move. Some politicians in Iceland suggest that the move was a ploy to get Iceland to discuss alternatives to joining the European Union and, thus, adopting the Euro as its currency. The Canadian government was also pretty quick to back away from Bones’ initial suggestion.
Current polls show that 70% of Icelanders are in favor of moving away from the krona but that they were evenly split over whether the Euro or the Loonie should be adopted. Since both countries share a geopolitical interest and Canada has thus far avoided some of the default woes that Europe has been facing, it will be interesting to see what Iceland chooses to do. I feel that the debate shows a real desire for alternatives to the Euro; ploy or not, the idea is gaining some traction and might be worth investing energy into. Economists who have analyzed the situation say that there are very few technical obstacles to adopting a currency such as the Loonie since it is well know.