Iceland to use Canadian currency?

[allhatnocattle.livejournal.com]

The Krona is history. There is much resistance in Iceland to join the EU or use the Euro as it`s own currency. And so there is some speculative talk that Iceland might start using the Canadian Loonie as it`s own currency.


This surprises me. I have many more questions about this then I do answers.

I do know the Canadian Mint mints currency for foreign governments. As well as some foreign passports printed by our Canadian Bank Note Company.

Contracting out domestic documents and or currency to foreigners does not give up national sovereignty, but perhaps makes one a little more vulnerable. (FYI; most small nations accept being vulnerable as le status du jour anyway)

But using some other countries currency as your own... seems... um... really vulnerable to our Canadian domestic policies.

Why Canada? Why not Danish Krones? Or British pounds? Or American dollars? I understand from the outside we look pretty stable (more stable then the Euro or the USD, FWIW) but we're just as likely to fall down as anyone else.

As a Canadian, I'm kinda flattered. Really I am. But I`m thinking we (Canada) are just too nice and will start to take Icelandic concerns into consideration of Canadian Parliamentary debates. I wonder if the next time we bail out AirCanada/Nortel/Bombardier (possibly RIM Blackberry?) will our Members of Parliament consider how this effects Iceland?

Will somebody please give me the Icelandic point of view on this? (En français, si vous souhaitez éviter un examen américain)

Comments

[planetrob.livejournal.com]

winter is coming

[allhatnocattle.livejournal.com]

This is always true, especially in Saskatchewan.

[fizzyland.livejournal.com]

Indeed it is.

[mikeyxw.livejournal.com]

Wow, this would be weird. Usually, if a country stops managing its own currency for some reason, they pick one that they can get loans with. If this is true and comes to pass, Iceland will be using the Canadian dollar but will likely be borrowing in US dollars or Euros. There probably isn't a big risk that Canada will suffer from hyper-inflation and send the Icelandic economy into a tailspin, but if their currency goes back down to more typical levels over the last 40 years, Iceland would see any loans made in dollars or euros increase by about 25% relative to the Canadian dollars they use in their economy. This kind of sucks if you’ve just borrowed to fund a business or a house and see your loan’s principal go up while your income stays the same.

Why pick a currency with that added risk? Of course, Iceland hasn’t exactly been making the best financial decisions lately.

[allhatnocattle.livejournal.com]

Seeing that as a major oil exporter the CAD closely follows the rise and fall of the oil markets, and there's not much fear in the oil markets falling any time soon, I believe this fear is unjustified.

However, if Americans stop buying oil, or stop paying for oil (it's only been 200 yrs since USA invaded Canada) then the CAD could be at risk of deflating.

[mikeyxw.livejournal.com]

Oil has always been cyclical. It has had a good 10 year run, but it has had good runs before.

Of course, demands today are actually quite a bit different than they have been in the past, so this may be the end of Oil's cyclical nature... or not. We will know in a few decades.

If Iceland chooses the Canadian dollar and oil tanks, their ability to pay debts will be reduced while their debts will stay the same. If they pick the USD or Euro, and either of them tanks, their debts will be reduced as quickly as their ability to pay them, making it a wash. This is why countries pick the USD or Euro.

[allhatnocattle.livejournal.com]

Demand is high while supply keeps shrinking. There are no more easy oil fields to exploit. Oil won't decline in price for some years to come.

There's was a concerted effort to move away from USD as preferred currency of trade... but when Iraq tried it USA invaded.

USD is very unstable, as they've done nothing to address issues which became obvious apparent in 2008 while the US has gone deeper in debt.

Euro has fallen pretty steady since it first became a hard currency in 2001. This poor track record means nothing as it's so young. But the shear volume of Euro at least made it competitive. That is until it was bailing out everyone

[mikeyxw.livejournal.com]

No real arguments except that oil has been cyclical since it became a commodity. Something might have changed, but then maybe it didn't

I don’t think Canada will go downhill any time soon, but nobody thought the US would have a meltdown a couple of years ago... until it did.

[allhatnocattle.livejournal.com]

Not only did I predict the last American meltdown, I also predict the next one.The economic situation in USA has not changed for any better. Wall Street needs tighter reins, and DC needs to hold them.

[rick-day.livejournal.com]

Maybe they secretly want to be adopted by Canada.

I think your country would make a fine foster mother!

[ddstory.livejournal.com]

Damn, our plot is so transparent. :S

[rick-day.livejournal.com]

I thought you lived in the 'vakias or 'garias or 'stans part of the world.

*runs to your profile*

[ddstory.livejournal.com]

More like the 'lands part of the world.

[rick-day.livejournal.com]

wow...quite a cool chick!

*ducks*


yeah..I AM feeling better.

[dv8nation.livejournal.com]

Fools! Do you not see what's happening here. First Nunavut and now this. All part of Canada's evil plan to control the world's frozen tundra supply (ever notice just how much of it their country if made of? Coicidence? I think NOT!) before their master stroke of marching on Santa's Workshop. When the last elf falls nothing will stop the Canada from holding Chrismas world-wide hostage!

Stop your evil plans now, you hokey-obessed grinches! If you do not, kiss the West Edmonton Mall G-O-O-D-B-Y-E!

[op-tech-glitch.livejournal.com]

Well, I'm holding on to my 11 kronur while I still got 'em then.

[kylinrouge.livejournal.com]

I saw this before. It's interesting. It reminds me of countries who adopt the US dollar when their own currency becomes too unstable. The fact they're going with Canada and not the US is a telling sign for the international community's opinion of the US dollar's stability.

[kylinrouge.livejournal.com]

It's also possible that they speculate that the looney is a good investment vehicle.

[allhatnocattle.livejournal.com]

There's lots of reason to think the USD a bad gamble.

[ddstory.livejournal.com]

We'll be brothers and sisters soon. Now gimme a bail-out! Or we'll switch on that volcano again.

[htpcl.livejournal.com]

Those sneaky Icelanders have been trying to conquer Canada for the last thousand years.

IT'S A TRAP!

[dv8nation.livejournal.com]

Dammit, we saw Canada first! Go take over Greenland, you jerks!

[htpcl.livejournal.com]

They already did. They used it as a launching pad for invading Canada.

[mahnmut.livejournal.com]

...And so the global socialist empire was begun.

[allhatnocattle.livejournal.com]

"More socialism means more democracy, openness and collectivism in everyday life."
-Mikhail Gorbachev

[mahnmut.livejournal.com]

"Communism is Soviet power plus the electrification of the whole country."
-V.I.Lenin

[mahnmut.livejournal.com]

"YAP! YAP! YAP! YAP!"