Few developed world economies were hit as hard in the economic crisis as wee Iceland’s. But could adopting the euro ward off future blows to the country’s financial system?
Gallup says the answer is moderate “yes.” When the national tender, the krona, fell 45% in value against most major currencies last year, Icelanders saw their assets plummet. Tens of thousands were laid off and a critical immigrant labor supply flew back to mainland Europe overnight
A slow recovery has begun, but the country’s GDP is expected to shrink 10% in 2009. Looking for a way out, sixty percent of the country, according to Gallup, is ready to dispense with the krona for good.
Long protective of an independent economy, Icelanders, like Norwegians, have been reluctant to join the Eurozone for fear of what restrictions it might bring to their lucrative fishing and gas industries.
But those times might be over. Iceland has just elected a pro-E.U. coalition government.
Eurozone expert Pasquale Bova reflected on the advantageous economic cohesion among Eurozone countries for Big Think.