Iceland Might Adopt Canadian Currency -- Talks In Process.

That's SUPER INTERESTING.

In brief remarks to be delivered Saturday in Reykjavik, Canadian ambassador Alan Bones will tell Icelanders that if they truly want the Canadian dollar, Canada is ready to talk.

But he will warn Icelanders that unilaterally adopting the loonie comes with significant risk, including complete loss of control over their monetary policy because the Bank of Canada makes decisions only for Canadians and the Canadian economy. He’ll caution, for example, that giving up the krona in favour of the Canadian dollar (CAD/USD-I1.01-0.004-0.36%) will leave the country with few levers, short of layoffs, to counter financial shocks and fluctuations in the loonie.

Source

I wonder how good of an idea this is. On the one hand it increases our tax base and allows another nation to take advantage of our pretty stable currency. It would also help having another nation carry our currency for travel reasons etc.

Not sure how I feel about this one, not quite sure of the reprocussions.

Thoughts ATS?

~Tenth

What an interesting turn of events..
I assume its still in discussion and nothing has been finalized yet?
Well I know its Not going to boost confidence in the Euro Or the US Dollar.

Might have something to do with all that Tar oil Canada supposedly has so much of.

Even the Australian Dollar is a good bet right now.

How it will effect the Canadian dollar? Your exports will get more expensive and your imports will get cheaper.

If you import more than you export (which I suspect is the case) then it should help temporarily. And if you start exporting oil refined from the tar sand (which I hear is not very cost effective) you will get a nice return.

Demand for a given currency raises its value over other currencies.

Dear tothetenthpower,

The article almost sounds like a cheerleader for the move. It does acknowledge a down side, but those seem to be brushed away.

Two things worry me a little. This was pitched to the opposition party, the ruling party has a different plan. I think I would have kept this very quiet so as not to appear to be taking sides inn their politics.

The other, comes from their relative sizes. When I was a kid, my parents (both Canadian) said "When the US sneezes, Canada catches pneumonia." The same would apply here, I think. Maybe the two countries could develop into significant trading partners, so that Canada would care what happens to Iceland, but I'm sure Canada would do whatever it had to to protect itself. At any cost to Iceland.

But it's probably a great deal, I'm just a pessimist.

With respect,
Charles1952

reply to post by TiM3LoRd


Yeah I mean, it helps having more influence in the Artic, considering Russia's and other nation's positioning that they somehow own that land all of a sudden.

Funny how they didn't want it until we found oil there ..

I like this idea I think, Iceland is a wonderful place, filled with wonderful people. The only nation to let their banks bite the dust after they found out they had been robbed.

Just the kind of people we need.

~Tenth

reply to post by charles1952


Yeah the article is a bit cheer leader-ish I'll admit that. But the downsides are really for Iceland, and Canada would reap many benefits.

As for us leaving them in the dust in order to preserve our interests, I would have disagreed with you, but Conservatives are in power and Stephen Harper is the devil. I'm serious, shot right up out of the ground through his bare feet one day in his 20's, and his been evil and corrupt ever since.

So I think if the Canadian people were in charge and we had Iceland as our friendly same currency neighboor, we would do everything possible to protect and help them through hardships by any means necessary. Canada has a long standing tradition of being very good to our friends, except the Natives, we are still trying to kill them off.

~Tenth

When the collapse happened in 2008 ,I watched as the value of the Icelandic currency
went down to below japanese yen standards ,which occured mainly because of the
financial mismanagement and poor oversight. Bankers fled with the "value" of the money.

Mismanagement is to blame and changing the currency won't change that.

But due to further mismanagement and dilusion of most of the financial heads and bankers
aswell as the government ,coupled with the devalued currency ,there have been talks
about abandoning the isk for another currency.

Somewhere along the way ,people lost the sight of the truth that the currency is what
people make of it and that is how its utilized in business. The banks are also to blame
with their limiting policies which pressure people to look towards dependency in other
currencies ,as they feel the one they have isn't good enough. That is utter nonsense.

reply to post by TiM3LoRd


You should do your research on the Tar sands. here is a link that should get you started.


www.energy.alberta.ca...

reply to post by tothetenthpower


It's a stupid idea. Apparently Iceland WANTS to be like Greece?

Those pushing for this should be fired and or voted out of office.

reply to post by Rockpuck


Why?

What's your reasoning?

Originally posted by Mystic Technician
When the collapse happened in 2008 ,I watched as the value of the Icelandic currency
went down to below japanese yen standards ,which occured mainly because of the
financial mismanagement and poor oversight. Bankers fled with the "value" of the money.

Mismanagement is to blame and changing the currency won't change that.

But due to further mismanagement and dilusion of most of the financial heads and bankers
aswell as the government ,coupled with the devalued currency ,there have been talks
about abandoning the isk for another currency.

Somewhere along the way ,people lost the sight of the truth that the currency is what
people make of it and that is how its utilized in business. The banks are also to blame
with their limiting policies which pressure people to look towards dependency in other
currencies ,as they feel the one they have isn't good enough. That is utter nonsense.

If they decide to use Canadian currency, they would have to follow Cdn banking rules, and Canada has some of the strictest banking laws out there. That's why we haven't had too much economic trouble here. Our banks are strong.

That could make a difference.

If it does all go through, I hope it works well for both countries.

Why stop at just the curency we could use a extra Province
And would help with the northern fight with Russia
Most of our province are as different from one other as would Iceland be.

reply to post by Trillium


I wonder if they would want to be adopted?
If they would ever want to join with another country, this one would probably be their best option

reply to post by tothetenthpower


Iceland survived it's financial Apocalypse for one reason and one reason only: The Krona. Without the ability to monetize their own currency, Iceland would have been bankrupted instantly, without absolutely no hope for a future outside of European servitude.

Greece cannot monetize their currency because they don't control their currency. They cannot adjust interest rates, they cannot dilute supply, they cannot even abolish and reestablish a currency .. and technically they cannot even declare an official bankruptcy because the bankruptcy would leave them destitute without currency control mechanisms to get back on track.

Either Greece has to take control of a new currency .. or Europe needs to go the way of the USA and formulate an all powerful dominate Federal European Government. Iceland, so long as they control their currency, is free to do whatever it wants. If they accept the Canadian currency as their own they place their entire national well-being in the hands of another nation.

Think of it like holding a time-bomb. Only you hold the magic button that can prevent the bomb from going off.. that's the way it is controlling your own currency.

Using a transnational currency like Iceland proposes, or the EU has in place, is the same scenario, only you give that magic button to someone else thousands of miles away.. when the time comes they may, or may not press the button. For poor Greece no one pushed their magic button.. an impoverished nation who cannot monetize to the times is to be left to prostrate in destitute poverty with no hopes of regaining strength.

reply to post by tothetenthpower


For a comparison check out some of the South American countries over the years. Some of them have adopted the US Dollar to replace their own currencies, while some others unofficially adopted it.

It had mixed results, obviously because of the same concerns Canada explained to Iceland about policies etc.

I always wondered what would happen if all currencies were pegged 1 to 1 with each other. Part of me thinks it might be time to start moving to a unified currency on a global scale.

Establishing a strong and responsible economy is no easy task, so I can see the appeal for one country to gain assistance from another. The wide spread use and acceptance of the USD is an example of this to some degree as it has assisted in many transactions around the world. I would be cautious about any nation releasing its economic sovereignty to another as it has generally preceded as an act of war. With strong cultural and trade ties I can acknowledge nations increasingly sharing economic and other resources on mutual terms, but not without a lot of talk, work and time.

I can sympathise with Iceland just wanting to throw their hands up and walk away from the economic mess going on. It is good Iceland has looked around and decided on an economic model that works for them. Getting into it and going through the detail is going to take a while.

With Iceland's population of around 317 000, it is a small nation and can acknowledge human resource difficulties in managing the growing economic issues. Iceland did gain a lot of public support with its stance on the GFC, so it would be a shame to see them knocked out of the game so soon.

reply to post by Xcathdra

I always wondered what would happen if all currencies were pegged 1 to 1 with each other. Part of me thinks it might be time to start moving to a unified currency on a global scale.

The SDR is one contender for this role in the long term www.imf.org... . If all the exchange rates where reset overnight it would cause chaos, but there does need to be some pressure towards balancing the economic playing field. To achieve this there needs to be proper checks and accounting of all economic data to provide oversight with the global supply and demand. This will assist to isolate corruption issues as they arises, which are quite extensive in the current state of play.

There is a lot of political power with a centralised global economic currency. The risks of such an operation going rouge will make 9/11 look like a child's birthday party. Done right and it will open up more human potential.