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Icelandic Krona

The krona (ISK) is the official currency of Iceland (plural “kronur”). Iceland is a small volcanic island situated in the North Atlantic, between Norway and Canada, lying just below the Arctic Circle. With a population of well under half a million, this Nordic country is fiercely independent, remembered in the United Kingdom for having taken on the might of the Royal Navy in the infamous “Cod Wars”, a series of territorial disputes relating to fishing rights, all of which Iceland won. The last ended in 1973 with the British acceptance of a 200 mile fishing exclusion zone around the island.
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Iceland is famous for its spectacular volcanic landscape, while its people are noted for their unique story telling tradition. The Icelandic Sagas are world renowned as highly descriptive folk poems, depicting the tales of early medieval Icelandic and Scandinavian history. They are particularly unusual and valued because they do not just tell the story of Kings and Queens and noblemen, but also describe the tales of everyday life for the ordinary people of the era.

In more modern times, the 19th Century saw a gradual and largely peaceful loosening of ties with their former rulers in Denmark. By 1918, Iceland was recognised as a fully sovereign state. Nevertheless the bond with the Danes remained as, despite home rule, Denmark continued to look after the foreign affairs of the fledgling state. So much so that Danish embassies across the world displayed both the Danish and Icelandic flags. During World War Two, the Danes and Icelanders declared themselves neutral, but shortly after the Nazis invaded Denmark, Iceland was also invaded, by the British – a story not much highlighted in history lessons in British schools! The occupation was later transferred to the United States as British resources became increasingly stretched.

During the war years, the Icelandic people voted to become fully independent, with near unanimity on the decision to declare a new republic. The move came to fruition in 1946 when allied forces finally left the island. Well almost. Iceland joined NATO shortly afterwards, resulting in the return of American troops, who remained for the entirety of the Cold War, and did not finally leave until 2006.

Iceland joined the European Economic Area in 1994 but, like its neighbours Norway, it remains outside the EU and hence has retained its own currency. The early 21st century saw an increasing reliance on financial service and international banking for economic growth. The strategy was astoundingly successful, with Icelanders becoming among the most prosperous peoples in the world. But it all went catastrophically wrong in 2008 when the Icelandic banking system crashed, resulting in a prolonged economic depression and considerable personal hardship.

The first Icelandic Krona arrived with independence from Denmark in 1918. Initially, the currencies remained identical, but the Icelanders started to mint their own coins and print their own notes from the 1920s. In modern times, being such a small nation with a currency not widely traded can result in some wide fluctuations in value, which the Icelandic government attempts to manage. The volatility was especially marked during the financial crisis of 2008 and in subsequent years. Theoretically, joining the euro would solve this problem and could have several advantages. However, as elsewhere in Europe, this remains a controversial topic and still divides opinion in this resolutely independent country. There are currently no plans to join. At the time of writing, the value of the Icelandic krona is around 180 kronur to the British pound.

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