Skip Navigation
NPR News
Enough already with the krona? (Flickr)

When Should A Country Abandon Its Own Money?

Apr 27, 2012 (Morning Edition)

Hear this

This text will be replaced
Launch in player

Share this


Iceland is a tiny nation in a big financial mess. It's still recovering from the aftermath of the 2008 global economic crisis, which caused a domestic banking collapse.

Its currency, the krona, is also in really bad shape. That's led Icelanders to pose an existential currency question: Should they abandon the krona?

One key problem is size. Iceland has about as many people as Staten Island, so there just aren't that many people on the planet who need to use the krona.

"There are more people using Disney dollars," says Arsaell Valfells, an Icelandic economist.

Having a small currency subjects Iceland to high volatility. Before the global economic crisis, money flooded into Iceland's economy.

The krona grew strong, and Iceland felt rich. When the economy crashed, the money rushed out, and the krona plummeted.

It's not clear what Iceland will do. They've discussed adopting the Canadian dollar — a nice, stable currency. Canada has said its open to the idea.

But the economies of Iceland and Canada don't have a lot in common with each other. They don't trade much.

Prime Minister Jˇhanna Sigur­ardˇttir favors a different currency. Her party wants to join the European Union. So she wants to go with the euro.

Or maybe Iceland will stick with the krona — and try to do a better job of keeping it out of trouble.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Read full story transcript

Missing some content? Check the source: NPR
Copyright(c) 2014, NPR

Visitor comments

on:

NCPR is supported by:

This is a Visitor-Supported website.