One of the reasons Iceland has recovered so well and left the Eurozone nations in its wake is because its currency was floating. Pegging it to the euro would be a very silly thing for that nation to do....Bill Mitchell – billy blog
Iceland should not peg its currency to the euro or any other currencies
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
1 comment:
I don't know the particulars of Iceland but allowing all citizens there to use its fiat in convenient, inherently safe account form at its central bank, like commercial banks, etc. may do, should increase the stability of the króna because:
1) the user base would be larger and more diverse, i.e. all citizens and not just a relative few depository institutions.
2) the amount of króna in existence would have to be much larger (because non-banks in the private sector have much larger risk-free liquidity needs in aggregate than depository institutions do and because risk-free savings would have to be in actual fiat, not in liabilities for fiat).
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