Iceland Should Replace Its Central Bank with a Currency Board.

Summary, in English

In this contribution, we discuss the menu of policy regimes available for Iceland. Each regime is evaluated against the characteristics of the Icelandic economy. We start with a short description of the Icelandic economy. We then examine the costs and benefts of alternative monetary regimes. We conclude that no regime Iceland has tried since attaining full sovereignty in 1918 has provided economic and financial stability in the long run. We reach the conclusion that Iceland
should follow the example of some other small economies and microstates and settle on a currency board, in this case with the euro as the anchor currency. To ensure the sustainability of the currency board, we recommend additional reforms of the labour market and of the fiscal framework of Iceland.

• Author: Fredrik N G Andersson; Lars Jonung
• Editor: Robert Z. Aliber; Gylfi Zoega
• Department/s: Department of Economics
• Publishing year: 2019-06-10
• Language: English
• Pages: 349-349
• Publication/Series: The 2008 Global Financial Crisis in Retrospect. : Causes of the Crisis and National Regulatory Responses
• Links: https://link.springer.com/book/10.1007/978-3-030-12395-6; https://link.springer.com/content/pdf/10.1007%2F978-3-030-12395-6_18.pdf
• Document type: Book chapter
• Publisher: Palgrave Macmillan
• Topic: Economics
• Keywords: iceland; monetary policy; currency board; Financial Crisis; iceland; monetary policy; currency board; finacial crisis
• Status: Published