Iceland Krona

Overview

The Krona is the official currency of Iceland, a island country in the North Atlantic Ocean, situated over the Mid-Atlantic Ridge. The island is volcanically and geologically active because it straddles the spreading boundary of the North American and European tectonic plates. The capital and largest city is Reykjavík, with the city’s surrounding areas in the southwest region of the country home to two thirds of the country’s population.

Economy

• Except for its abundant hydroelectric and geothermal power, Iceland lacks natural resources.
• Historically, Iceland depended heavily on fishing, which still provides 40% of export earnings and employs 7% of the workforce despite declining fish stocks.
• Abundant hydro-electric capacity has allowed Iceland to encourage power-intensive industries, including aluminium and ferro-silicon smelting plants.
• In the 1990s, Iceland introduced extensive free market reforms and as a result gained some of the world’s highest ratings for economic and civil freedoms and egalitarianism, and was applauded for its strong economic growth and rapidly expanding financial system.
• By 2007, the country was ranked: seventh in the list of the world's most productive countries per capita, at U.S. $ 54,858; and fifth in GDP purchasing power parity ($ 40,112). That same year it topped the list of nations ranked by Human Development Index (HDI).
• As early as 2006, Iceland’s economy was facing problems of growing inflation and current account deficits, partly as a result of the earlier free market reforms. In 2008, the financial system collapsed entirely in a sweeping financial crisis precipitated by bank failures. Iceland had to obtain emergency funding from the International Monetary Fund and a range of European countries in November 2008.

History

• The Króna is composed of 100 aurar, although coins in any denomination less than one króna have not circulated since 2003.
• The Danish Krone was introduced in Iceland in 1874, replacing the earlier Danish currency, the rigsdaler. In 1885, Iceland began to issue its own banknotes.
• The Iceland Króna was issued separate from the Danish Krone after the dissolution of the Scandinavian Monetary Union at the beginning of World War I, and Iceland’s autonomy from Denmark in 1918.
• The first coins were issued in 1922, in denominations of 10 and 25 aurar. These were followed in 1925 by 1-króna and 2-krónur coins, and in 1926 by 1-eyrir, 2-aurar and 5-aurar coins.
• In 1946, the design of all coins was altered to remove the royal monogram, after Iceland's independence from Denmark was precipitated by Denmarks’ occupation by Nazi Germany.
• In 1981, the Iceland Krona was revalued, with 100 old krónur (ISJ) valued at 1 new Iceland Krona (ISK).
• In 1981, coins were introduced in denominations of 5, 10 and 50 aurar, 1 króna and 5 krónur. These were followed by 10 krónur pieces in 1984, 50 krónur in 1987 and 100 krónur in 1995.
• As of 1 October 2003, Icelandic banks no longer accepted the 5, 10 and 50 aurar coins.