By Frazier Fathers
Although it came as a shock to many, the idea that Iceland – one of the hardest hit nations by the 2008 financial crisis – would call for adopting the Loonie, presents Canada with a unique opportunity in the 21st century.
Following the collapse of the Icelandic economy, the Icelandic krona lost 60% of its value and the government was forced to place strict restrictions on currency exchange to prevent a flood of currency leaving the nation. Numerous options have been floated to solve the Icelandic currency dilemma and amongst these, the Canadian dollar carries some attractive features. Firstly, and most importantly from an economic standpoint, is that both Canada and Iceland share similar business cycles with their resource based export economies. Second, the current and ongoing struggles within the European Union and the questions of its future stability means that despite the ongoing ascension negotiations, the Euro may not be the best option for the Icelandic economy. Even the mighty US dollar faces a number of other serious concerns considering the political deadlock that grips Washington. Their economy that has been stuck in a rut since the 2008 recession and with the massive debt burden carried by the world’s last superpower, the once mighty greenback seems like less of an attractive option.