Oh boy.
(Background: there's a referendum later this year not on EU membership but about having further negotiations about joining the broken union... and as part of that, the monetary status of this isolated island nation is, I'd say, key.)
New report dropped today, by an assortment of no-name Scandi economists/central bankers/econ professors. Shockingly, their recommendations land NOT in "independent monetary policy trumps everything" but that, actually, it'd be better for Iceland to use the euro:
The report ties the króna directly to persistently high inflation, elevated interest rates, and cyclical economic instability. Iceland currently carries the highest borrowing costs in western Europe,
The drawbacks to Iceland from having its own currency likely exceed the benefits, the country’s Finance Ministry said, citing the conclusions of a government-commissioned report.
"The Nordic country currently has the highest borrowing costs in Western Europe""The Nordic country currently has the highest borrowing costs in Western Europe"
...and 5% inflation, not coming down. Was 10-15% during 'rona, housing is a runaway disaster like everywhere else (hashtag liquidity sink and monetary premium) and the oligopolistic banking sector is hopelessly uncompetitive. Bring us some German and Dutch efficiency, eh!
The report outlines several potential benefits of adopting the euro. Lower interest rates top the list. Beyond cheaper credit, the report cites reduced transaction costs for businesses that trade with Europe, greater overall economic stability, and deeper integration with the European economy.
yes, yes, and yes. All correct.
Money wants to be one, and the smallest/most irrelevant of the world's ~160 currencies or whatever def needs to go. Ultimately we could do with just one international currency... maybe it's green, maybe it's gold, maybe it's orange #1428602 -> ZAP ME SOME SCUDOS, PETER SCHIFF!
Anyway, I'm enjoying the show. Grabbing the popcorn and looking forward to a summer of completely asshat-ignorant takes on money.
+, from a related NYT piece on Iceland:
Groceries can be expensive, experts said, in part because of taxes on products imported from the bloc.
Yeah, yeah... dudes, you can just stop. No need for big-ass political/monetary negotiation for that.
My paywall tricks failed me today, so I grabbed some overarching quotes from the Ministry of Finance press release and google translated them for yous.
I mean they are all a melting ice cube some are just melted smaller than others, right?
But it's so cold here, how can they be melting??
um global warming?
What's that?
World smallest currency? Iceland has 400k inhabitants. The Seychelles have only 100k inhabitants who are poorer and use the Seychellois rupee
Aaah, good to know!
I googled but didn't get any good answers.
I knew some stacker would fact-check me, THANKS!
It’s amazing that even in the age of search engine decay, being wrong on the internet remains a reliable way to get accurate information.
Riiiight, pretty amazing
Is it actually independently managed or is it pegged to another currency?
Belize has a similar population to Iceland and is much poorer but they pegged their currency to the dollar, so it's effectively not an independent currency.
But they do have some nice hats on them notes.
That's true eh
haha...fiat clown world never ceases to entertain!
Money wants to consolidate the same way networks do.