Canadian ambassador to Iceland Alan Bones planned to deliver a talk on the future of Iceland’s current currency, the Krona, but instead finds himself offering to begin talks on Iceland’s adoption of the loonie as its means of exchange.

Word of the remarks apparently reached Joseph Lavoie, Foreign Minister John Baird’s press secretary, who promptly announced that the conference would be an inappropriate venue to make such political statements. Alan Bones was allegedly approached sometime last year by prominent Icelandic businessmen about the idea of Iceland adopting the loonie as its national currency. Since its national bubble burst, Reykjavik has desperately sought a means to restore stability to markets and restore confidence so that investment and prosperity can return to Iceland. The Canadian dollar offers considerable advantages to Iceland over the krona, including but not limited to its being both a stable and liquid currency in line with global commodity prices, the export of which is vital to Iceland’s economy.

Outside of their geographic proximity, however, Iceland and Canada do not share a lot in common. The official line from Reykjavik is that Iceland’s goal is still to join the Euro but, given that currency’s current situation, support on both sides for such a move is on the wane. Other options include pegging the value of the krona to another currency, such as the dollar, or the unilateral adoption of another nation’s currency. The adoption of the Canadian dollar by Iceland could prove a boon to the fishing and shipping industries that would of course see greater financial synergies between them should they share a common currency.

 

[The Globe and Mail]