Iceland Should Replace Its Central Bank with a Currency Board.

• 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 Icelandshould 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.

• 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.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

Nyckelord

iceland

monetary policy

currency board

Financial Crisis

iceland

monetary policy

currency board

finacial crisis

Publikations- och innehållstyp

kap (ämneskategori)

ref (ämneskategori)