Editing Icelandic króna (section)

===Iceland and unilateral adoption of another currency===
Some small countries, such as [[Salvadoran colón|El Salvador]], [[Currency of Ecuador|Ecuador]] and [[Montenegro and the euro|Montenegro]], have unilaterally adopted the use of a more stable foreign currency as a means of controlling inflation. The cost of this is generally very high, as the adopting country loses all control over monetary policy, and all the benefits of [[seignorage]]. A [[currency board]] is a second tier solution, where the exchange rate of the currency is [[Fixed exchange-rate system|fixed]] to that of another country, or a [[basket of currencies|"basket" of currencies]].{{citation needed|date = January 2019}}

There was a discussion in 2012 about the feasibility of adopting a foreign currency. The idea of adopting the [[Canadian dollar]] was popular and the  Canadian ambassador to Iceland stated that Iceland could adopt the currency if it so wished.<ref>{{cite web|url=http://www.icenews.is/index.php/2012/03/02/canada-ready-to-discuss-letting-iceland-use-its-dollar/|title=Canada ready to discuss letting Iceland use its dollar|publisher=icenews.is|access-date=8 March 2012|archive-date=4 March 2012|archive-url=https://web.archive.org/web/20120304233431/http://www.icenews.is/index.php/2012/03/02/canada-ready-to-discuss-letting-iceland-use-its-dollar/|url-status=dead}}</ref> Canada was favoured due to its northern geography and similar resource based economy, in addition to its relative economic stability.<ref>{{cite news|last=McKenna|first=Barrie|title=Canadian envoy to Iceland sparks loonie controversy|url=https://www.theglobeandmail.com/report-on-business/economy/iceland-eyes-loonie-canada-ready-to-talk/article2356634/|access-date=3 March 2012|newspaper=The Globe and Mail|date=2 March 2012|location=Toronto|archive-date=4 March 2012|archive-url=https://web.archive.org/web/20120304152551/http://www.theglobeandmail.com/report-on-business/economy/iceland-eyes-loonie-canada-ready-to-talk/article2356634/|url-status=dead}}</ref>

Arnór Sighvatsson, Deputy Governor of the Central Bank of Iceland, at a meeting of the Icelandic Federation of Labour on 10 January 2012, said:

::I am of the view that unilateral adoption of a foreign currency or a currency board could only be considered prudent if all of Iceland's largest banks were owned by a strong foreign bank with the financial strength to provide them with liquidity during times of distress. Second, unilateral adoption of another currency is a solution that is hardly worth considering unless EMU ([[Economic and Monetary Union of the European Union]]) membership has been ruled out for the foreseeable future, as it entails extra cost of purchase of new base money for the banking system (generally in the range of 70–100 billion krona in recent years) and larger precautionary foreign exchange reserves (particularly if the banks are not foreign-owned). It would be pointless to pay that price for a few years' benefit, plus the seigniorage that would revert permanently to the ECB [[European Central Bank]]. Currencies other than the euro have also been mentioned. But considering the characteristics required of such a currency, there is no other that comes close to being as beneficial for Iceland as the euro is.<ref>{{cite web|url=http://www.bis.org/review/r120117d.pdf?frames=0 |title=Arnór Sighvatsson: Iceland's future monetary and exchange rate regime }}</ref>

{{As of|2018}}, Icelandic authorities had no plans to adopt a foreign currency.<ref>{{Cite news|url=http://www.ruv.is/frett/segir-engar-tofralausnir-i-gjaldmidli|title=There are no magical solutions in currency.|last=Hjaltadóttir|first=Jóhanna Vigdís|date=2018-10-18|work=[[RÚV]]|language=is|quote=This reevaluation of monetary policy is made with the assumption that the krona will be the Icelandic currency for the near future. [...] The parties in power support using the krona as the Icelandic currency.}}</ref>