Icelandic króna

Icelandic króna íslensk króna (Icelandic)
1, 10, 50 and 100 krónur
ISO 4217 Code	ISK
User(s)	Iceland
Inflation	17.1%
Source	Central Bank of Iceland, November 2008
Subunit
1/100	eyrir (obsolete)
Symbol	kr, Íkr
Nickname	kall
Plural	krónur
eyrir (obsolete)	aurar
Coins	1, 5, 10, 50, 100 krónur
Banknotes
Freq. used	500, 1000, 5000 krónur
Rarely used	2000 krónur
Central bank	Central Bank of Iceland
Website	www.sedlabanki.is

The króna (plural krónur) (sign: kr; code: ISK) is the currency of Iceland. The name, meaning "crown", is related to that of other Nordic currencies (such as the Swedish krona and Norwegian krone), and the name "Icelandic crown" is sometimes used, for example in the financial markets. It is subdivided into 100 aurar (singular eyrir).^[1] The ISO 4217 currency code is ISK.

First króna, 1874–1981

The Danish krone was introduced to Iceland in 1874, replacing the earlier Danish currency, the rigsdaler. In 1885, Iceland began issuing its own banknotes.

The Icelandic króna separated from the Danish krone after the dissolution of the Scandinavian Monetary Union at the start of World War I and Icelandic autonomy from Denmark in 1918. The first coins were issued in 1922.

Coins

Iceland's first coins were 10 and 25 aurar pieces introduced in 1922. These were followed in 1925 by denominations 1 and 2 krónur and in 1926 by denominations of 1 eyrir, and 2 and 5 aurar. In 1946, the coins' designs were altered to remove the royal monogram (CXR), following Icelandic independence from Denmark in 1944, when Denmark (but not Iceland) was occupied by Nazi Germany.

Starting in 1967, new coins were introduced due to a considerable fall in the value of the króna. 10 króna coins were introduced in that year, followed by 50 aurar and 5 króna pieces in 1969 and 50 krónur in 1970.

Banknotes

The first notes issued in 1885 by the Lansssjod Islands were in denominations of 5, 10 and 50 krónur. In 1904, the Bank of Iceland (Íslands Banki) took over note production and introduced 100 króna notes. In 1921, the Rikissjod Islands began issuing paper money, with notes for 1, 5, 10 and 50 krónur.

In 1929, another bank, the Landsbanki Íslands took over issuance of denominations of 5 krónur and above, with the Rikissjod Islands continuing to issue 1 króna notes until 1947. The Landsbanki Íslands introduced 500 króna notes in 1935, followed by 25 and 1000 króna notes in 1957.

In 1961, the Seðlabanki Íslands became the central bank of Iceland and started issuing paper money, in denominations of 10, 25, 100, 500, 1000 and 5000 krónur.

Second króna, 1981–

In 1981, the Icelandic króna was revalued, with 100 aurar krónur (ISJ) being worth 1 new króna (ISK).

Technically, the króna is still composed of 100 aurar, although, in practice, coins less than one króna have not circulated for many years. In September 2002, Davíð Oddsson, the Icelandic Prime Minister at the time, signed two regulations decreeing that all monetary amounts on invoices and financial claims should be stated and paid in whole krónur only and that coins with a value of less than one króna should be withdrawn from circulation.

Coins

In 1981, coins were introduced in denominations of 5, 10 and 50 aurar, 1 and 5 krónur. These were followed by 10 króna pieces in 1984, 50 krónur in 1987 and 100 krónur in 1995. As of 1 October 2003, Icelandic banks no longer accept the 5, 10 and 50 aurar coins.

Banknotes

Icelandic banknotes are printed with the dates from which the legal basis of the currency derives. In 1981, notes were issued in denominations of 10, 50, 100 and 500 krónur on the law of 29 March 1961. 1000 krónur notes were introduced in 1984, followed by 5000 krónur notes in 1986 with the same law.

100, 500, and 1000 krónur were reissued in 1994 on the law of 5 May 1986. In the following year, a new denomination 2000 krónur was issued for the very first time. The 2000 króna note is subtly different from the other notes. For example, the underprint pattern extends all the way upward and downward, while the other denominations had white margins on every side. The Arabic numeral 2000 is printed in multi color on 3 of the 4 instances. And the numeral 2000 on the lower left corner of reverse is vertical. The "shadow" of the numeral is printed with SÍ in microprint.

The 22 May 2001 series saw more changes than mere date update. The underprint and microprint change of the 2000 króna note were incorporated. The 1000 and 5000 krónur notes also received metallic foils next to the portrait.

Notes of 100 krónur or less no longer circulate, as they have been withdrawn by the central bank. As of 2006, the vast majority of banknotes in circulation are of the 500, 1000, and 5000 denominations (these generally being the only notes dispensed in ATMs, for example). 2000 króna notes exist but are unusual and are at times referred to as "tourist money" by the local population. Their use never became widespread.

Law of 29 March 1961 Series[2]
Image		Value	Dimensions	Main Colour	Description			Date of issue
Obverse	Reverse				Obverse	Reverse	Watermark
		10 krónur	130 × 70 mm	Blue	Arngrímur Jónsson the Learned	Old Icelandic household scene based on Auguste Mayer's drawing	Jón Sigurðsson	1981
		50 krónur	135 × 70 mm	Brown	Guðbrandur Þorláksson	Printers at work in the 16th century
		100 krónur	140 × 70 mm	Green	Árni Magnússon	Monastic scribe
		500 krónur	145 × 70 mm	Red	Jón Sigurðsson	Jón at his writing desk
		1000 krónur	150 × 70 mm	Purple	Brynjólfur Sveinsson	Brynjólfskirkja church (1650-1802) at Skálholt		1984
		5000 krónur	155 × 70 mm	Blue-green multicolour	Ragnheiður Jónsdóttir	Ragnheiður instructing two girls in embroidery		1986
Law of 5 May 1986 Series
		100 krónur	As previous					1994
		500 krónur
		1000 krónur
		2000 krónur	150 × 70 mm	Multicolour	Jóhannes Kjarval	Kjarval's painting Yearning for Flight and his drawing Woman and Flowers	Jón Sigurðsson	1995
Law of 22 May 2001 Series
		500 krónur	As previous, but the underprint design extends upward and downward to fill the margin					October 2005
		1000 krónur						November 2004
		5000 krónur						November 2003
These images are to scale at 0.7 pixels per millimetre, a Wikipedia standard for world banknotes. For table standards, see the banknote specification table.

Currency issues

Iceland is not a member of the European Union and does not use the euro.

As it stands, the Icelandic currency is a low-volume world currency, strongly managed by its central bank, with a high degree of volatility not only against the US and Canadian dollars, but also against the currencies of the other Nordic countries (Swedish krona, Norwegian krone, Danish krone and the euro). For example, during the first half of 2006, the Icelandic króna has ranged between 50 to 80 per US$. However, with the collapse of Iceland's banking system in early October 2008, the Icelandic krona fell in value to about 110-115 per dollar, and by mid-November had continued its slide to ca. 135 to the dollar. Until this collapse, the króna was considered overvalued; a Big Mac cost the equivalent of nearly six U.S. dollars.^[3] The previously high costs for American tourists have thereby been reduced, which Iceland's tourism industry hopes to exploit.^[4]

Tourists to Iceland will generally not need to carry much Icelandic currency, as in most cases electronic payment is accepted. Other currencies are very rarely accepted in Iceland. A notable exception is Keflavík International Airport, where the US dollar, euro and some other currencies are accepted by all merchants. Certain stores in downtown Reykjavík, such as Eymundsson and Mál og menning accept some foreign currencies, including the Danish krone, the Swedish krona, United States dollar, pound sterling, euro and the Japanese yen.

The overall level of technological sophistication is noteworthy in Iceland. Iceland has, for example, among the highest per capita computer usage in the world (far higher than the UK or USA). The saturation of technology in Iceland has had ramifications in their monetary system; a very large percentage of all transactions in Iceland take place through electronic forms of payment, such as debit and credit cards. It is also worth noting that, given the generally extremely high prices in Iceland, banknotes are not issued in sizes conducive for larger transactions. The largest denomination banknote is the 5000 króna note, while a mid-range dinner for two in Iceland, without drinks or dessert, can easily exceed 5000 krónur. This effect may accelerate the Icelandic move towards a semi-cashless economy.

Iceland and the euro

Because of the volatility between the euro and the króna, some Icelanders are considering the idea that Iceland might become a eurozone member without joining the European Union. Former Foreign Minister Valgerður Sverrisdóttir has said in an interview with Iceland Radio that she seriously wishes to look into whether Iceland can join the euro without being a member of the 27-nation EU, according to Norwegian news NRK. Valgerður Sverrisdóttir believes it is difficult to maintain an independent currency in a small economy on the open European market. The policy of the present Icelandic government, however, is as before: that neither EU membership nor euro adoption is on the agenda.

The issue is highly controversial among Icelanders. An opinion poll on the matter of Iceland joining the European Union released on September 11, 2007, by Capacent Gallup showed that 53% of respondents were in favour of adopting the euro, 37% opposed and 10% undecided.^[5] Another poll produced for the Icelandic newspaper Fréttablaðið and released on 30 September 2007 showed 56% opposed to euro adoption and 44% in favour.^[6]

In January 2008, a poll by the Icelandic Chamber of Commence put support for Iceland to abandon the króna for another currency at 63%. Additionally, a number of companies in Iceland such as Ossur, have started to pay their employees in euro and US dollars, mainly due the high inflation and high volatility.^[7]

2008 financial crisis

Main article: 2008 Icelandic financial crisis

In October 2008, the effects of the 2007/08 global financial crisis brought about a collapse of the Icelandic banking sector. The value of the króna plummeted, and on 7 October 2008 the Icelandic Central Bank attempted to peg the króna at 131 against the euro.^[8] This peg was abandoned the next day.^[9] The króna later fell to 340 against the euro before trade in the currency was suspended^[10] (by comparison, the rate at the start of 2008 was about 90 krónur to the euro^[11]). After a period of tentative, very low-volume international trading in the króna, activity is expected to pick up again throughout November 2008, albeit still with low liquidity, as Iceland secures an IMF loan.^[12]

See also

• Scandinavian Monetary Union
• Economy of Iceland

References

External links

• Vitaly Getmansky coins

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