Iceland Should Replace Its Central Bank with a Currency Board.

Research output: Chapter in Book/Report/Conference proceedingBook chapter

Abstract

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.

Details

Authors
Organisations
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics

Keywords

  • iceland, monetary policy, currency board, finacial crisis
Original languageEnglish
Title of host publicationThe 2008 Global Financial Crisis in Retrospect.
Subtitle of host publicationCauses of the Crisis and National Regulatory Responses
EditorsRobert Z. Aliber, Gylfi Zoega
PublisherPalgrave Macmillan
Chapter18
Pages349
Number of pages369
Publication statusPublished - 2019 Jun 10
Publication categoryResearch
Peer-reviewedYes