Friday, March 02, 2012

More Loonies Abroad?

Here's an interesting possibility I found out via James Nicoll.  Iceland, which has been severely effected by economic problems since the 2008 collapse of its banks, is considering adopting a foreign currency to replace its current krona.  Surprisingly, it seems that not only is the Canadian dollar one possible choice, it's a very popular idea amongst Icelanders.  And Canada's ambassador to Iceland, Alan Bones, is going to tell them tomorrow that Canada is interested in the idea.  Iceland won't get a say in Canadian fiscal policy, which will limit how much they could control their economy.  But given the problems with the krona apparently many in Iceland are willing to take the risk.

The possibility is a bit ironic given that there have been various calls over the years for Canada to adopt the US dollar as its currency.  Unlike with Iceland however Canadians who supported the idea believed it would have to involve joint US-Canadian control of fiscal policy.  That always struck me as a highly unlikely possibility, and is why I never saw such a union happening.  Funny to see the shoe on the other foot.

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