Iceland to use Canadian Dollar as its official currency.

[Libaax-Sankataabte]

 

These past few years have been tough on Iceland, with the tiny, windswept country going bankrupt in the financial crisis and then having to take a bailout from the International Monetary Fund.

 

It’s been hit by soaring unemployment, business failures and massive currency volatility. And now it’s had enough.

 

The Canadian ambassador to Iceland, Alan Bones, is set to announce that the Bank of Canada is ready to begin talks about adopting the loonie as the new national currency instead of the krona.

 

The hope is that by moving to a larger, more stable currency, Iceland’s economy would enjoy some of the benefits, including better footing for international trade.

 

According to Reykjavik media, Mr. Bones will deliver his message in a speech on Saturday at an event sponsored one of the country’s leading political parties.

 

 

With a population of just 320,000, roughly the size of Windsor, Ont., Iceland has frequently fallen victim to sharp fluctuations in the value of it krona, with the currency nearly doubling in value between 2000 and 2008, and then collapsing after the failure of several of the country’s leading banks owing to wrong-way bets on toxic assets.

 

The ambassador is expected to warn his audience about the risks of adopting a currency that is controlled by a another country’s central bank.

 

A spokesman for the Ministry of Finance in Ottawa declined to discuss the matter. “We don’t speculate on other country’s currencies or domestic issues,” said Jack Aubry.

 

Officially, Iceland is still looking to join the European Union but that plan has fallen out of favour among voters in the wake of the region’s sovereign debt crisis, which is expected to persist for many years into the future.

 

The idea of moving to the loonie first began getting attention at the beginning of last summer as Iceland’s Progressive Party began floating the concept the media.

 

Besides being both northern countries, Canada and Iceland would appear to have little in common.

 

According to the federal government, bilateral trade amounted to just $146-million in 2005, consisting of about $90-million of Canadian exported vehicles and machinery and $56-million of Icelanic fish products, ships and machinery sold to Canada.

 

If Iceland goes ahead, it won’t be the first time a country has adopted another national currency. Indeed, the U.S. dollar is the de facto currency in parts of South America and internationally it remains the most widely used currency in the world.

 

For a time in the late 1990s and early 2000′s there was a debate over whether Canada should abandon its loonie, which was trading at a significant discount to its current value, in favour of the greenback.

 

Iceland would have a lot to gain by going to the Canadian dollar, said Finn Poschmann, vice president of research at the C.D. Howe Institute.

 

“It would lose control over its currency which is an important buffer against economic shocks, however it would gain a stable currency that it could use freely in international transactions,” he said.

 

http://business.financialpost.com/2012/03/02/iceland-wants-the-loonie/

[Libaax-Sankataabte]

Hmmm ... Exploring the idea of becoming a Canadian province perhabs?

[nuune]

^^ Highly unlikely, but they were abandoned by the Scandinavian countries whom it had special relationships with, but the biggest bullies were the Dutch and the British when Icelandic economy collapsed.

[Nin-Yaaban]

LoL, why is't called the "Loonie"? that's just funny walahi.

[peasant]

^ There is an image of a bird on one side of the one dollar coin and that bird is known as a loon. So the name loonie comes from there and is also a nickname for the Canadian currency as well.

[grasshopper]

Nin-Yaaban;797990 wrote:

LoL, why is't called the "Loonie"? that's just funny walahi.

it is pretty funny...to make it worse the two dollar coin is called a "toonie"

[Che -Guevara]

Lack of imagination or attempt to rhyme?

[Miskiin-Macruuf-Aqiyaar]

War Reer Ayslaan yeenan deg degin. Tan ha aqristaan.

 

Alberta-Ontario cold war to linger amid strong Canadian dollar

 

The strength of the Canadian dollar threatens to prolong inter-provincial tensions as its effects are felt differently across the country.

 

Strong commodities prices have helped buoy the loonie combination that boosts Alberta's fortunes but hurts Ontario as it hammers manufacturing. Indeed, BMO Nesbitt Burns noted today, some 500,000 factory jobs have been lost in Canada over the 10 years since the currency began climbing back from its 62-cent lows.

 

In a separate study today, senior currency strategists David Watt and Stewart Hall of RBC Dominion Securities pointed out that "wrenching adjustments are imposed on a relative few" by the high currency. And they noted the spat between Alberta's Premier Alison Redford and her Ontario counterpart Dalton McGuinty.

 

"With future oil sands production, global oil demand and oil exports seen keeping [the Canadian dollar] persistently strong, regional tensions are likely to linger, particularly if the benefits remain highly concentrated."

 

They cited "a (cold) war of words" between Alberta, home to Canada's oil industry, and Ontario, a manufacturing hub. Ms. Redford had wanted Ontario to help in the fight for pipelines, while Mr. McGuinty responded by saying he'd take a weaker currency over a "rapidly growing" energy sector in Alberta.

 

"Reasonable projections for oil sands production, global oil demand and oil exports, with almost all of the increased oil production destined for foreign shores ... suggest persistent tailwinds to [the Candian dollar] over time," said the RBC strategists. "McGuinty’s statement hints at the potential for lingering regional tensions during the next commodity super cycle."

 

Ontario's factories have been hit hard, though the province has still created hundreds of thousands of jobs in other sectors over the past several years. Mr. Watt and Mr. Hall believe most of the hit to manufacturing jobs is now done, though they don't see that work returning in the near future.

 

Their comments came as BMO's deputy chief economist, Douglas Porter, published a study showing the impact of the dollar's return to grace over the past 10 years.

Sii aqriso

___________________

 

The premier of Ontario now wants the Canadian dollar in uu ku noqdo suu ahaa in early 2000s when halkii doolar was worth 62 cents US camal. War kac dheh, waa gartiis doolar xawilaad kuma diree. I remember it used to cost $165 Canadian per US $100 sent.

[Nin-Yaaban]

Miskiin-Macruuf-Aqiyaar;798034 wrote:

War Reer Ayslaan yeenan deg degin. Tan ha aqristaan.

 

 

 

Sii aqriso

___________________

 

The premier of Ontario now wants the Canadian dollar in uu ku noqdo suu ahaa in early 2000s when halkii doolar was worth 62 cents US camal. War kac dheh, waa gartiis doolar xawilaad kuma diree. I remember it used to cost $165 Canadian per US $100 sent.

I dunno much about economics, but i think the stronger ur currency is the more ur export suffers. A lot of countries devalue their currencies so they can make their goods cheap to export/buy overseas. This probably explains why China seems to export more to the rest of the world.