- By Joshua Keating
Joshua Keating was an associate editor at Foreign Policy
I was in Vancouver over the weekend for a conference that I will likely blog about in more detail shortly, but while I was there, my attention was struck by this story in Saturday’s Globe and Mail, which suggests there’s some interest in Iceland around the idea of dropping the struggling krona for the Canadian dollar:
There’s a compelling economic case why Iceland would want to adopt the Canadian dollar. It offers the tantalizing prospect of a stable, liquid currency that roughly tracks global commodity prices, nicely matching Iceland’s own economy, which is dependent on fish and aluminum exports, and in the future, energy.
There’s also a more sentimental reason. They’re both cold, Arctic countries.
“The average person looks at it this way: Canada is a younger version of the U.S. Canada has more natural resources than the U.S., it’s less developed, has more land, lots of water,” explained Heidar Gudjonsson, an economist and chairman of the Research Centre for Social and Economic Studies, Iceland’s largest think tank.
“And Canada thinks about the Arctic.”
Officially, the Icelandic government is targeting membership in the 27-member euro zone. But support among Icelanders is slipping.
In a recent Gallup poll, seven out of 10 Icelanders said they would happily dump their volatile and fragile krona for another currency. Their favoured alternative is the Canadian dollar, easily outscoring the U.S. dollar, the euro and the Norwegian krone.
The Icelandic government’s official plan is still to adopt the euro, and the Canadian ambassdor to Iceland was upbraided by his bosses back in Ottawa for plans to give a speech promoting the Canadian dollar as a new currency for Iceland. There a number of countries where U.S. dollars are in circulation, either as an alternative to the local currency or as the sole legal tender, but none, so far, using the loonie — currently trading at US$ 1.00497.
The fact that there’s even this much enthusiasm for the idea could be evidence in support of Laurence Smith’s notion of power shifting to the NORCs — Northern Rim countries — in the century ahead.