Iceland Considering a Switch to the Canadian Dollar

According to a report from The Globe and Mail Iceland is considering adopting the Canadian Dollar as its currency.

The financial crisis of 2008 hit iceland particularly hard, as Iceland's three largest banks leveraged themselves to a tremendous extent. The resulting aftershock sent the country into an severe economic downturn, and lead to somewhat of a revolution in the country, with popular protests prompting reform.

Countries adopting a foreign currency is not a new phenomenon. It has happened frequently in the past during various economic crisises, such as in Russia following the collapse of the Soviet Union and at various times in South America.

Still, the use of the Canadian dollar is interesting. Iceland's proximity to Europe would appear to make the euro a more attractive choice, as would the Norwegian Krona.

The US dollar would also be suitable, as it remains the world's reserve currency.

Still, in a poll of Icelanders, they easily preferred the Canadian dollar to these other currencies. While Iceland's population is tiny, their decision to pick the Canadian dollar may suggest that international confidence in the euro and US dollar is continuing to decline.