Will the loonie soon be flying high in … Iceland?
For months, Icelanders have been toying with the idea of ditching the tarnished krona, which has never fully recovered from the collapse of the financial system four years ago. But one of the intriguing suggestions floating around the North Atlantic island is that instead of the adopting the euro — a natural fit given that Iceland has taken initial steps to join the European Union — it might cast a furtive eye to the Canadian loonie.
This is not as outlandish as it sounds. Canada’s banking system is something Iceland’s is not — sound — and the Canadian economy, with its mooring in much-desired natural resource wealth, is among the most stable and predictable in the advanced world.
Canada also does not have the massive overhang of sovereign debt that will trouble Europe or even the United States for years…
Bank of Montreal economist Douglas Porter says the feat can be accomplished. Iceland would need to buy sufficient Canadian currency to do the trick, which likely will initially put upward pressure on the loonie.
But the impact on Canada would be small, he said, since Iceland’s population is only about 317,000 and the economy is less than one per cent of Canada’s…
“Frankly, I think we should take it as a great compliment. I know everybody thinks of Iceland as a basket case, but they are beginning to turn things around,” Porter said.
“It shows you how far we’ve come in the past 10 years that people are even talking about this.”
I think it’s a great idea. Probably add futher currency to the idea of Americans moving to Canada for the opportunity to live in a stable, sensible nation that offers reasonable healthcare and a good education.
Yes that was a deliberate pun.