There has been an interesting discussion in Iceland in the past days about our National Currency, the Icelandic Krona. This has to do with a recent claim, e.g. by the Nobel prize winner Krugman, that the post-crunch super-devaluation of the krona has in fact helped us keeping the unemployment levels lower than in countries like Ireland. Of course this comes at a price. The Krona has essentially been “protected” by different types of currency restrictions for most of its lifespan. This is not exactly a healthy environment for businesses to flourish. As this fine article by Þórlindur Kjartansson (in Icelandic) points out, the Krona has lost 99.95% of its value with respect to the Danish Krona since the two separated. Keeping Danish cash in your drawer amounts to 11% interest rate a year in Icelandic Kroner. Here’s a short history of the Icelandic Krona for the past 30 years.
The data comes from the Central Bank of Iceland. See: http://www.sedlabanki.is/?PageID=37 Now here’s a small applet showing the collapse of the Krona through the years: [processing file=”http://pabamapa.com/wp-content/uploads/2011/11/movingISKchart3.jar” width=”500″ height=”400″] [Click on the applet window to reset the graphics.]