…as far as I can tell. From a quite reputable newspaper, here goes:
For 150 years, no country has expressed interest in adopting the Canadian dollar — the poor cousin to the coveted greenback.
But now tiny Iceland, still reeling from the aftershocks of the devastating collapse of its banks in 2008, is looking longingly to the loonie as the salvation from wild economic gyrations and suffocating capital controls.
And for the first time, the Canadian government says it’s open to discussing the idea.
In brief remarks to be delivered Saturday in Reykjavik, Canadian ambassador Alan Bones will tell Icelanders that if they truly want the Canadian dollar, Canada is ready to talk.
But he will warn Icelanders that unilaterally adopting the loonie comes with significant risk, including complete loss of control over their monetary policy because the Bank of Canada makes decisions only for Canadians and the Canadian economy.
Kudos to all of you who had been predicting that.
For the pointer I thank M Kaan, maybe someone is playing an elaborate joke on Bob Mundell here.
Loonie is the nickname for the Canadian dollar coin, because of the picture of a loon on the back. The two-dollar coin is the toonie.
Neither is this a joke. Liberals are reporting on a new “study” where they don’t even understand what the study measures.
“More than 9 million retired Americans don’t have enough money to cover basic living expenses, according to a new study.”
http://www.latimes.com/business/money/la-fi-mo-retiree-living-expenses-20120301,0,2848072.story
Now if you read this article you would probably be shocked to find out that this is what the study is measuring (caps for emphasis)….
“To assess how well elders are doing on a state-by-state basis, the ranking below compares median 2010 incomes for SINGLE RENTERS OVER THE AGE OF 65 to the Elder Index for each state.”
Note: There are less than 9 million people who are SINGLE RENTERS OVER THE AGE OF 65. 40 million people over 65. 20% rent. Average size of a household renting is less than the average size of a household that owns. I’ll let everyone else do the math.
Unrelated, ideological spam, yay. That said it’s nice to seen you take such a keen interest in the well being of seniors. Finally I’ll note that comparing incomes of single renters to expenses of single renters is not the craziest thing in the world even if the totals are wrong (totals don’t appear in the click through study).
Back on topic though, Iceland and Canada are two of my favorite countries, if they got married the kids would be adorable.
>> …if they got married the kids would be adorable.
Albeit a little strange.
Thank you for playing.
Newfoundland did adopt the Canadian dollar.
Iceland should just ask to join Canada, The Quebeckers will just have to get over not being so special anymore. Oh, and they’ll have to get used to sending their kids to learn a useless minority language, the way Anglophone parents already have to.
Or Norway. Or the UK. Iceland only has 300K people – it wouldn’t really be that big a deal. They should just pick a nearby country and join up.
Norway, maybe. UK never; unless they are suicidal.
Have there been any studies on what is the minimum population necessary to make national sovereignty worthwhile? Whatever that number is, 300,000 people is well below it – there’s a reason Guam and Samoa are part of the US. Hell, in America 300,000 people would be too small to make up a proper State, much less a country. Iceland was ruled as a semi-independent Norwegians and/or Danish protectorate for centuries, and maybe it should’ve stayed that way.
The geographical isolation of Iceland is a strong argument for sovereignty, though. It is unlikely that a foreign government located several thousand miles from the country could make good decisions about said country.
France has the highest number of Litterature Nobel prices.
French is far from being useless.
Litterature Nobels are useless on their own right.
In addition to Charlie noting that Newfoundland joined Canada in 1949 and adopted the Canadian dollar, the Turks and Caicos islands has at some points, expressed interest in both adopting the dollar and joining Canada.
I made an argument that Iceland should join Canada in 2008 for the same reasons (some coverage: http://thinkprogress.org/yglesias/2008/10/10/189952/a_canadian_solution/ sadly linkrot has claimed a lot of the coverage).
Before such a momentous move, it might make sense for Iceland to hire a pre-eminent economist to draft a recommendation. Frederic Mishkin already is quite familiar with Iceland’s situation and may have the insight and skills needed. He is available for a modest six-figure fee.
For a suitable fee.
….or McKinsey?
looks like Icelanders are looking for a way or nation to deflect their problems. Welcome to foreign policy Canada, have fun.
No offense intended for the Canadian readers, it’s good to see Canada on the stage.
I thought everything we’re seeing about Greece demonstrated that fiscal union without political union is a terrible idea.
How would it deflect any of their problems? They would surrender their monetary policy to Canada, would have to somehow import the Canadian dollars to actually have enough cash on hand to operate their economy and be tied into an economy that itself is basically tied into the American economy.
Because, if there’s anything the Eurocrisis has taught us, it’s that outsourcing your monetary policy without compensating automatic stabilizers works *exceedingly* well.
This is all just an excuse for finance journalists to write headlines using the word “loonie-zone”.
How about Iceland staring to use CTM?
http://en.wikipedia.org/wiki/Canadian_Tire_money
Beaten like a red-headed stepchild! I came in here to post that exact thing. Well, maybe not the link to Wikipedia.
Will the CTM-Zone have an associated free movement of peoples agreement, or will free movement be contingent on shopping at CT?
What does this get them that fixing the Kroner/Canadian dollar exchange rate wouldn’t get them?
Credibility – fixed exchange rate (that can be abandoned) invites speculative attacks on the currency.
Does a nation of 300k people even need a monetary policy? That’s smaller than Minneapolis.
Put it on Autopilot and forget about it.
why does smallness make monetary policy less important?
Iceland should join Maine. Then we don’t even have to add a star to the flag.
This is the kind of convenience that will sway Icelandic minds.
only ‘quite’ reputable?
If this is serious, the conclusion to draw from this is that capital controls are simply viewed as unacceptable regardless of the evidence.
We’ve known for a long time that there are trade-offs between an independent monetary policy, a stable exchange rate and open capital markets. These trade-offs are much more significant for small economies. Iceland can have both its own monetary policy and a somewhat stable exchange rate if it is willing to intervene to prevent the huge run-up in external debt that led to the 2008 crisis.
Open capital markets are nice idea but they increasingly appear to be a raw deal for small economies or relatively poor countries. Not having control over your own monetary policy (unless you are part of a fiscal union or have a high degree of labor and capital mobility) is a bad idea as the Euro crisis reminds us and wild swings in capital flows can be devastating to the real economy.
“if it is willing to intervene to prevent the huge run-up in external debt that led to the 2008 crisis.”
BINGO. Change the laws to favor equity over debt instead of vice versa.
Isn’t Iceland trying to become a member of the EU?
Are they looking for the highest bidder?
Perhaps Scotland should join Iceland?
And THAT’S how you go about “empire building!”
There is an interesting alternative history line. William does not become the Conqueror in 1066, England falls to the Danes. The resulting polity(plus the rest of Scandinavia) turns away from Europe.
They are in N. America c. 1300 and conquer the continent from the north while Castile and Aragon are still trying to expel the Arabs and become Spain!
Why would they have turned away from Europe? If anything Scandanavia would’ve turned its attention to Flanders and/or northern Germany.* To turn their attention west they’d have had to start with Iceland or Ireland which, no offense, were total backwaters by the Medeival reckoning.
*Indeed, this is the first thing Sweden did some hundreds years later when it actually did obtain Scandanavian hegemony.
Anglo-Saxon England exhibited little interest in Continental Europe, but after the Norman conquest they were bound to Europe(Angevin Empire). Ireland and Iceland yes and then Vinland and south.
Funny.
A few years ago, a small reactionary conservative group asked me to develop a plan for destabilizing the dollar and therefore the government. I tried to show that since Texas has its own oil and electrical grid, that if it adopted the Canadian Dollar the consequences would achieve the desired end.
It was fun to work on.
I have long thought that Iceland should become the 51st US state. It gets the US dollar, access to the Fed, and FDIC bank deposit insurance, plus security. The US would have to recapitalize the banks as part of the deal.
The percentage of Icelanders who speak English well may exceed that of California.
Has any country considered adopting the Swiss franc? Or are they afraid of Swiss imperialism? Canada should be even safer as far of future imperial overlords go.
The Canadian dollar at least makes more sense than the gold standard.
A neat dissertation would be if someone did a hypothetical on what would have happened to Greece if it had adopted the Canadian dollar instead of the Euro.
Canadians are proud to state that we have already a significant population of Icelanders (Manitoba being central) who immigrated here late in the last century. IDEA; Have a referendum on the question (to include all opinions ie. Canada, Norway EU etc) and go from there with our worldly lives. The Icelanders (in my opinion don’t deserve this economic down-turn – the kronar which was at one time “worth something” is now “basically worthless” – the elders of the land of fire and ice do not deserve this thrown on their laps at this point in their lives. Lets think about their long-term prospects, and Quality of Life. Please note; as a Canadian, I would be honoured to have such a beautiful country/people join our beloved country – we have many, many commonalities to celebrate; northern hearts, hardships, and the similar humanly characteristics built from such experiences, and love/care for our neighbours, especially when there is need. Imagine what it might be like to celebrate our future together under one flag and, be kin forever – there for each another for at least a thousand generations!!! As we all know; Iceland will always be Iceland (on the map) just as Newfoundland has remained Newfoundland. It’s all these different relationship which make Canada unique an so very beautiful – don’t just join us, be one of us, as you’ll find in your heart that you are very much like us to begin with.
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