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One of the factors leading them to reconsider EU membership is monetary policy. The Icelandic króna is a very small currency that fluctuates considerably. Switc

• Doohickey-d 18d ago
  As I understand it, Kosovo and Montenegro adopted the Euro unilaterally, without agreement from the EU. I don't think that'd be (politically) possible for Iceland (?). So the EU would need to agree to this, which also doesn't seem politically possible (?)
  • skinfaxi 17d ago
    Why would they need permission to use a currency?
  • anovikov 18d ago
    Well, it doesn't require EU's approval by definition. Because it means just unilaterally handing out EU a lot of cash.
  • Beretta_Vexee 18d ago
    There are a whole host of microstates and more or less autonomous overseas territories that use the euro. If Mayotte can use the euro even though the island is on the brink of collapse, I don’t see why that would be a problem for Iceland. I don’t think this is a problem for the EU – quite the opposite, in fact. It strengthens the euro’s position in international trade, increases the number of users and boosts the volume of trade. More customers for the EU’s financial services sector. There are a number of countries that unofficially use the US dollar as their currency for major transactions without asking anyone’s permission (Cambodia come to mind).
    • embedding-shape 18d ago
      > If Mayotte can use the euro even though the island is on the brink of collapse Isn't Mayotte part of France and been for quite some time? I'd guess they switched to the Euro together with France and all the other French territories, but maybe I'm wrong?
      • eloisant 18d ago
        Yes, Mayotte is very much part of France. Monaco, Vatican and San Marino are however sovereign micro-states that switched to the euros because they already had a monetary agreement with France or Italy.
        • riffraff 18d ago
          Also Andorra, which has an agreement since 2006 to mint their own Euros.
    • eloisius 18d ago
      There’s also Ecuador who officially uses the USD as their currency.
      • throwawaycan 18d ago
        And Panama!
• sajithdilshan 18d ago
  Not sure for a small country like Iceland if it make sense to use Euro over having control over their currency. Things could get super expensive overnight and it would work when things are smooth, but in current political climate you never know when the next financial crisis going to happen and don’t think they want Brussels to dictate their monetary policy
  • gizajob 18d ago
    You obviously haven’t been to Iceland. Things already are extremely expensive.
    • 087532379864 18d ago
      [flagged]
    • sajithdilshan 18d ago
      Converting to Euros would make it more expensive. Daily groceries could become a luxury
• thaumasiotes 18d ago
  > One solution for Iceland would be to join the eurozone without becoming a member of the EU, as Kosovo and Montenegro have done. This only makes sense if the primary concern is native (Icelandic) politicians being unable to responsibly manage their currency. Otherwise, there's no advantage over just maintaining a stable exchange rate with the euro.
• victorbjorklund 18d ago
  You can just voluntarily adopt euro. Montenegro isn’t officially in the eurozone. They just unilaterally adopted it.
  • tonyedgecombe 18d ago
    The problem is if you let your debts run too high then you can’t print your way out the problem. Very few countries seem to have the fiscal discipline to make joining the euro a sensible option.
    • tadfisher 18d ago
      You need a desirable currency for that to work. Not every currency has a volume like the USD and Euro.
• WJW 18d ago
  If the króna fluctuates so much, wouldn't that also indicate that demand for the króna just fluctuates a lot? Presumably, in absence of major conflicts between Iceland and its trading partners, as a result of economic imbalances. Those won't go away if Iceland were to join the eurozone, either as a EU member or via the Kosovo/Montenegro route. It might deprive the Icelandic central bank of a valuable tool to stabilize their economy, by weakening or strengthening their currency as economic circumstances demand. This was a big problem for the southern EU economies back in credit crisis times. Now there are of course many other considerations that might offset this downside to joining the eurozone. I would personally welcome our Icelandic friends joining the EU (if they chose to), but it's good for them to have a public debate about both the up- and downsides first.
  • csdreamer7 18d ago
    > Presumably, in absence of major conflicts between Iceland and its trading partners, as a result of economic imbalances. Those won't go away if Iceland were to join the eurozone, either as a EU member or via the Kosovo/Montenegro route. Part of it would. There is a cost to maintaining your own currency that can drag down the economy. Counterfeiting is an obvious one, getting software and markets to support is another one, but what parent above you is likely arguing against currency speculators/manipulators. You need to defend it to keep it relatively stable so it stays as a store of value or your companies will just use dollars or euro anyway. If your currency is so small a firm in New York can force your currency to change by 50% in a night, regardless of the fundamentals of the businesses who use the króna, you have a problem. Using the Euro also means businesses do not have to pay conversion costs or deal with additional accounting issues for tracking the fluctuations in the currency.
  • T-A 18d ago
    > If the króna fluctuates so much, wouldn't that also indicate that demand for the króna just fluctuates a lot? Yes, relative to the size of Iceland's economy. Average daily ISK turnover on the interbank market is only 4 or 5 million EUR [1]. A single commercial transaction, like the purchase of a new trawler from abroad, can easily be worth 2-3x that amount and cause the exchange rate to spike due to the lack of liquidity. [1] https://cb.is/news-and-publications/article/interbank-market-for-foreign-exchange-in-april-2026 https://cb.is/news-and-publications/article/interbank-market...
• bluebarbet 18d ago
  During the 2010 debt crisis there was much talk of profligate Greece being "thrown out" of the euro zone. In this dark scenario Greek civil servants would get their pay rises in worthless drachma, but Greek homeowners would be left with unpayable euro mortgages. But nobody ever talked about the Montenegro option (similar to Ecuador and USD). I never understood this. What was stopping Greece from defaulting and keeping the euro anyway?
  • 317070 18d ago
    Look into who they were the debtor to. Turns out that a lot of German banks would have needed to scrap debt from their books.
    • bluebarbet 18d ago
      So a Greek default would have created an EU political crisis. Greece would have been in the doghouse. Perhaps the other members would have suspended its structural funds, or even voting rights. Seems impossible it would have been thrown out of the EU, there's not even an obvious way to do that. All very unpleasant, but then there was clearly an upside for Greece. It just seems interesting that the scenario was never really entertained or gamed out in the media.
      • 317070 18d ago
        It was though? I remember a default being a real option in the media. But in the end, it was clear that unlike in Iceland, bankruptcies were not considerable, and so a bailout was going to happen. The only question was how the bailout would be structured. Yanis Varoufakis made his name back then by going against the grain and proposing a hairsplit, but instead an approach was chosen where Greece never really defaulted, but its population was harshly punished for it.
        • bluebarbet 18d ago
          A default plus Greece unilaterally continuing to use the euro was the scenario hardly ever evoked.
• amenghra 18d ago
  I love this diagram: https://www.reddit.com/r/europe/comments/1tda6wl/european_integration_updated_2026_a_eular_diagram/ https://www.reddit.com/r/europe/comments/1tda6wl/european_in... There are so many treaties besides EU.
  • xaxbxcxdxe 18d ago
    Is there any "western" values coalition? Like really adhering to them, not just the "free trade" lowest comon denominator.
    • aleph_minus_one 18d ago
      > Is there any "western" values coalition? I would claim (both by living in Germany and the posted diagram) that for each of these values, most share this value, but not everybody. The problem is that for each value, the stakeholders who do/don't share it can be different. So, a lot of agreements are very complicated. This is also in my opinion a central reason for the rising anti-EU sentiments in many countries: the more is dicated from above in Brussels/Strasbourg, the more often it happens that in some group who has a really strong opinion on this topic strong anti-EU sentiments will become socially very accepted in this group. The solution that I would thus propose to keep these anti-EU sentiments not to escalate would be to keep the areas where the EU has any influence to those areas - where there is an insanely strong consensus over what is "right" vs "wrong" over the whole EU, and - which are politically rather uncontroversial (i.e. the opposite of being a political minefield).
    • brendoelfrendo 18d ago
      What does "western" values mean?
    • jankubica 18d ago
      As a side note, you cannot escape values even when you are only considering "free trade". As an example, influential EU law cases include questions of promoting abortion as a freedom of service, ban on Sunday sales, ban on sex dolls ... Then free trade clashes with other fundamental rights, such as a right to strike. Arguably this tension is exactly the spill-over effect that made EU project successful – integration in one area (originally steel and coal for obvious post-WWII reasons) creates pressure in an adjacent area to integrate as well.
• eloisant 18d ago
  Yes their currency suffered a lot in 2008, they would have been protected if they were using the Euro at the time
• zeryx 18d ago
  But then what currency would they use in eve online? How could we replace all of the iskies memes
• bluGill 18d ago
  They don't need to join the EU to use the euro. There are countries that use the U.S. dollar even though they're not the U.S. Sometimes it's just de facto use the dollar. There is technically a local currency and people use it when forced to but they would prefer the dollar. If you're a small country, something like the dollar or the euro is probably your best bet because of the stability it affords. The advantage to joining the EU is Iceland gets a little bit of input on how the euro was run versus if you use the dollar of the euro when you're not a member of their respective country you are partially tying your financial stability to something that you have no input or control over.
  • rozab 18d ago
    This means giving up all the advantages of central banking and is generally only done informally by countries experiencing hyperinflation without capital controls. It's a marker of a failed state. I remember in live TV debates for the 2014 Scottish independence referendum, the Yes leader insisted that Scotland could not be prevented from using the Pound sterling. It's technically true, but a very, very bad idea.
    • xvedejas 18d ago
      Montenegro unilaterally uses the euro and it doesn't seem to otherwise be a failed state. Besides this being a "marker", what do you think are the actual problems caused? Like why does a small country need its own capital controls when there is a very stable currency available nearby?
      • bluGill 16d ago
        The reason for your own currency is you can set your own interest rates to fit your local economy. If you are in a local recession while others are doing well you might want lower interest rates, while others need them higher. Both places are trying to make the same balance of inflation vs stimulating the economy - but they need different answers. I'm not convinced it is worth it. Generally world economies are tightly tied anyway and so what is right for large currencies is close enough for everybody. The less coupled you are to the world the more important it is that you can be different.
• interactivecode 18d ago
  Can they become part of the eurozone without joining the european union?
• rdm_blackhole 18d ago
  Joining the Euro is not the panacea that everyone thinks it is. It comes with some major drawbacks: - no control of interest rates since these apply to everyone in the Eurozone regardless of the current economic situation of a particular country. - no more devaluation to get back some competitiveness on international markets - strict financial guidelines in theory (3% deficit max per year and 60% of GDP/debt ratio) Finally, the biggest problem as it's been highlighted by many economists is that it spreads the risk to the whole Eurozone which sounds great in theory until you find yourself drowning in debt like Greece was in the 2010s or like France is nowadays. Because now your government is borrowing in Euros, the markets move very slowly and the full impact of the finances of any Euro government is completely subdued since in the pool of countries that use the Euro there is Germany which is very good and very trustworthy creditor. Take a look a what happened with Liz Truss in the UK, she made some rather stupid announcements and the markets reacted as they should and that lead to her removal and to a change of plans. In France by contrast, no such changes have happened despite the fact that the French economy has been going downhill for awhile due to their 5%++ yearly deficits and their 120% debt ratio. If France still had the Franc, then the markets would have forced the politicians in charge to either course correct and/or eventually to pass on multiple painful but necessary reforms. Instead what we have is complete political paralysis and many presidential candidates are openly calling for a roll back of more pension reforms, lowering the retirement age to 60, increasing the pay of all the civil servants by 20% and more complete out of control spending. The supposed EU fiscal rules have never been enforced anyway which means that countries don't really have any incentives to curb their spending since the ECB is always backing them.
  • inigyou 18d ago
    Note that a lot of that stuff still exists when you have your own currency, but it gets absorbed into exchange rate movements instead of being an explicit decision. This is both a blessing because it automatically balances, and a curse because you can accidentally shift it in an unwanted way and it may be hard to notice you're doing so. For instance you can have a different interest rate when you have your own currency, however it will cause your currency value to shift over time in opposition to the interest rate difference. For instance I think New Zealand had 6%ish rates while the mainstream was 3%ish, as a result the NZ dollar devalued by 3%ish per year. If they wanted a stable currency value, they would've had to maintain interest rates comparable to their trading partners. The fact this isn't happening to Japan is a great mystery to economists because it normally does happen.
• riffraff 18d ago
  Kosovo and Montenegro adooted the Euro unilaterally, but various micro countries use the Euro through special treaties (Monaco, San Marino, Vatican etc). Iceland is 10x larger but this in principle possible.
• bbarn 18d ago
  Not sure how it would affect home mortgages but the majority of icelanders are on mortgage plans that the principal remaining rises with inflation(I forget the name, I left a few years ago) - and will never likely pay them off.
  • solidr53 18d ago
    Not quite true. The ratio fluctuates with the market conditions. Figure https://sedlabanki.is/library/?itemid=d2527537-11bc-4aca-9443-6a10e786c8e3&action=width%3A1024 https://sedlabanki.is/library/?itemid=d2527537-11bc-4aca-944... Verðtryggð loans are popular when economy is hard, people can enter the real estate market. Once things go in the opposite direction people change to Óverðtryggð lán.
• orphereus 18d ago
  Well, Kosovo and Montenegro haven't joined the Eurozone. They just use the Euro, but they have no influence in the monetary (?) policy. Edit: I'm not the first one to point this out, so to add some new information: both of them used Deutsche Mark prior to Euro, Montenegro even under the union with Serbia.
  • lokar 18d ago
    An at various times others have done the same with the USD