Iceland money is called the Icelandic króna (ISK), and this guide from money-central.com will provide you with a detailed look at this unique currency, its history, and its use in Iceland’s economy. Understanding the króna is essential for anyone planning a trip to Iceland or dealing with Icelandic businesses.
1. What is the Official Name of Iceland Money?
The official name of Iceland money is the Icelandic króna (plural: krónur). The ISO currency code for the Icelandic króna is ISK. One króna is divided into 100 aurar, although aurar are rarely used in circulation today.
The Icelandic króna, often shortened to ISK, is more than just a means of transaction; it represents the country’s economic sovereignty and cultural identity. Established in 1885, the króna replaced the Danish krone following Iceland’s departure from the Latin Monetary Union. The term “króna” translates to “crown” in English, a common naming convention for currencies in Scandinavian countries. The symbol for the króna is kr, which is placed either before or after the numerical value, depending on the context.
1.1 What is the History of the Icelandic Króna?
The Icelandic króna has a rich history, dating back to 1885 when Iceland gained monetary autonomy from Denmark. Before that, Iceland used the Danish krone.
| Period | Currency Used |
|---|---|
| Before 1885 | Danish Krone |
| 1885 – Present | Icelandic Króna (ISK) |
Icelandic króna has undergone several changes, especially in the 20th and 21st centuries. According to research from the Central Bank of Iceland in July 2024, the króna has faced periods of high inflation and devaluation, particularly during the financial crisis of 2008. These economic challenges have prompted discussions about adopting a more stable currency, such as the euro, but Iceland has so far maintained its independent currency.
1.2 Why Did Iceland Choose the Name “Krona” for Its Currency?
Iceland chose the name “króna” (meaning “crown”) for its currency as it was a common practice among Scandinavian countries to use similar names for their currencies. This reflected historical and cultural ties within the region.
The choice of “króna” was not unique to Iceland. The Scandinavian monetary union, established in 1873, saw Denmark, Sweden, and Norway all adopt currencies named “krone” or “krona.” This standardization facilitated trade and economic cooperation among these nations. Even after the dissolution of the monetary union in 1914, each country retained its respective “krone/króna,” underscoring the historical and cultural connections. For Iceland, adopting the króna was a symbolic step towards asserting its national identity while aligning with regional monetary practices.
1.3 How is the Icelandic Króna Managed and Regulated?
The Central Bank of Iceland (Seðlabanki Íslands) manages and regulates the Icelandic króna. It is responsible for issuing banknotes and coins, implementing monetary policy, and maintaining the stability of the financial system.
The Central Bank of Iceland plays a crucial role in maintaining economic stability. Established in 1961, the bank is responsible for controlling inflation, managing foreign exchange reserves, and overseeing the nation’s financial institutions. According to the International Monetary Fund (IMF), the Central Bank’s policies have been instrumental in navigating Iceland’s economic challenges, particularly in the aftermath of the 2008 financial crisis. The bank’s monetary policy decisions, such as setting interest rates, directly impact the value of the króna and the overall health of the Icelandic economy.
2. What Are the Denominations of Icelandic Króna Banknotes and Coins?
Icelandic króna banknotes come in denominations of 500, 1,000, 2,000, 5,000, and 10,000 krónur. Coins are available in denominations of 1, 5, 10, 50, and 100 krónur.
| Banknote Denomination (krónur) | Prominent Figure(s) Depicted |
|---|---|
| 500 | Jón Sigurðsson (leader of the Icelandic independence movement) |
| 1,000 | Brynjólfur Sveinsson (Bishop of Skálholt) |
| 2,000 | Jóhannes Kjarval (painter) |
| 5,000 | Ragnheiður Jónsdóttir (embroiderer) |
| 10,000 | Jónas Hallgrímsson (poet and naturalist) |
2.1 What Do the Banknotes Look Like and What Figures Are Depicted on Them?
Icelandic banknotes are known for their unique designs, featuring prominent figures from Icelandic history and culture.
The banknotes of Iceland are not just currency; they are pieces of art that reflect Iceland’s rich cultural heritage. Each banknote features portraits of influential figures from Iceland’s history, accompanied by images of the country’s stunning landscapes. The 500 krónur note, for instance, features Jón Sigurðsson, a key figure in Iceland’s independence movement. The 1,000 krónur note showcases Brynjólfur Sveinsson, a bishop and scholar who preserved many important Icelandic manuscripts. These designs serve to educate and remind Icelanders of their cultural identity and historical milestones.
2.2 Are There Any Security Features on Icelandic Banknotes to Prevent Counterfeiting?
Yes, Icelandic banknotes have several security features to prevent counterfeiting, including watermarks, security threads, and microprinting. These features help to ensure the authenticity of the currency.
To protect against fraud, Icelandic banknotes incorporate a range of advanced security features. These include watermarks that are visible when held up to the light, security threads embedded within the paper, and microprinting that is difficult to reproduce. Additionally, some banknotes feature iridescent stripes or color-shifting inks that change appearance when viewed from different angles. According to a report by the Central Bank of Iceland, these security measures are regularly updated to stay ahead of potential counterfeiters and maintain public confidence in the currency.
2.3 Are Coins Still Commonly Used in Iceland, or Are Most Transactions Electronic?
While electronic transactions are increasingly common in Iceland, coins are still used, especially for smaller purchases. However, many Icelanders prefer using debit or credit cards for most transactions.
3. What is the Current Exchange Rate Between the Icelandic Króna and Other Major Currencies?
The exchange rate between the Icelandic króna and other major currencies fluctuates daily based on market conditions. You can find the most up-to-date exchange rates on the website of the Central Bank of Iceland or through financial news sources.
| Currency | Approximate Exchange Rate (June 2024) |
|---|---|
| USD | 1 USD = 140 ISK |
| EUR | 1 EUR = 150 ISK |
| GBP | 1 GBP = 175 ISK |
3.1 How Does the Exchange Rate Affect Tourists Visiting Iceland?
The exchange rate significantly affects tourists visiting Iceland. A favorable exchange rate can make Iceland an affordable destination, while an unfavorable rate can make it quite expensive.
For tourists, the exchange rate can dramatically impact the cost of a trip to Iceland. When the króna is weak against other currencies like the U.S. dollar or the euro, tourists find that their money goes further, making accommodations, meals, and activities more affordable. Conversely, a strong króna can make Iceland a pricier destination. It’s advisable for travelers to monitor the exchange rate leading up to their trip and consider purchasing króna when the rate is favorable to maximize their spending power.
3.2 Where Can You Exchange Currency in Iceland?
You can exchange currency at banks, currency exchange offices, and Keflavík International Airport. Banks typically offer the best exchange rates, but exchange offices may be more convenient.
When arriving in Iceland, tourists have several options for exchanging their currency into Icelandic króna. Banks, such as Landsbankinn and Íslandsbanki, generally offer competitive exchange rates, but their opening hours may be limited, especially in rural areas. Currency exchange offices are often located in tourist hotspots and offer extended hours, but their rates may be less favorable. Keflavík International Airport provides currency exchange services upon arrival, allowing travelers to have local currency on hand from the start of their trip.
3.3 Is It Better to Exchange Currency Before Traveling to Iceland or Upon Arrival?
It is generally better to exchange currency upon arrival in Iceland to get a more favorable exchange rate. However, it’s a good idea to have a small amount of ISK on hand for immediate expenses like transportation from the airport.
4. How Widely Are Credit and Debit Cards Accepted in Iceland?
Credit and debit cards are widely accepted in Iceland, even for small purchases. Visa and Mastercard are the most commonly accepted cards.
In Iceland, credit and debit cards are ubiquitous, making it convenient for both locals and tourists to make purchases. Visa and Mastercard are the most widely accepted, while American Express is less common. According to a survey by the Central Bank of Iceland, over 90% of retail transactions are conducted using electronic payment methods. This widespread acceptance means that you can easily pay for everything from groceries and gas to tours and accommodations with your card.
4.1 Are There Any Places in Iceland Where Cash is Preferred or Required?
While credit and debit cards are widely accepted, some smaller establishments or remote locations may prefer or require cash. It’s always a good idea to have some ISK on hand.
While Iceland is largely a cashless society, there are still situations where having cash on hand can be beneficial. Smaller establishments, such as local markets, farm stays, and remote guesthouses, may prefer cash payments. Additionally, some public transportation options in rural areas may not accept cards. Tipping, while not customary, is appreciated in the service industry, and cash is often the easiest way to show your gratitude. It’s advisable to carry a small amount of Icelandic króna to cover these situations.
4.2 Are There ATMs Available in Iceland, and Are They Easy to Find?
Yes, ATMs are widely available in Iceland, especially in cities and towns. They are generally easy to find and accept most major debit and credit cards.
ATMs, known locally as “hraðbanki,” are readily accessible in Iceland, particularly in urban centers and tourist areas. Major banks such as Landsbankinn, Íslandsbanki, and Arion Bank offer extensive ATM networks. These ATMs typically accept major credit and debit cards, including Visa, Mastercard, and Maestro. While ATMs are less common in remote areas, they can still be found in larger villages and towns. It’s a good idea to check the availability of ATMs along your travel route, especially if you plan to venture into the Icelandic countryside.
4.3 What Are the Fees Associated With Using Credit Cards and ATMs in Iceland?
Fees for using credit cards and ATMs in Iceland can vary. Credit card companies may charge foreign transaction fees, while ATMs may have withdrawal fees. Check with your bank before traveling to understand potential charges.
5. What Was the Impact of the 2008 Financial Crisis on the Icelandic Króna?
The 2008 financial crisis had a significant impact on the Icelandic króna, leading to a sharp devaluation of the currency. This crisis caused considerable economic turmoil in Iceland.
The 2008 financial crisis had a profound and lasting impact on the Icelandic króna and the nation’s economy. The collapse of Iceland’s major banks led to a severe devaluation of the króna, causing inflation to soar and crippling the purchasing power of Icelandic citizens. According to a report by the Icelandic Ministry of Finance, the króna lost more than half of its value against major currencies in a matter of months. The crisis forced the government to implement capital controls to stabilize the currency and prevent further economic collapse.
5.1 How Did the Icelandic Government Respond to the Currency Crisis?
The Icelandic government responded to the currency crisis by implementing capital controls, seeking assistance from the International Monetary Fund (IMF), and restructuring the banking system.
In the wake of the 2008 financial crisis, the Icelandic government took decisive action to stabilize the economy and protect the króna. Capital controls were imposed to prevent the outflow of capital and stabilize the currency’s value. The government also sought emergency financial assistance from the International Monetary Fund (IMF), which provided a multi-billion dollar loan package. Additionally, the government nationalized the major banks and implemented a comprehensive restructuring plan to restore confidence in the financial system. These measures, while controversial, were credited with preventing a complete economic collapse.
5.2 What Were the Long-Term Effects of the Crisis on Iceland’s Economy and Currency?
The long-term effects of the crisis included a period of economic recession, high inflation, and increased unemployment. However, Iceland’s economy has since recovered, and the króna has stabilized to some extent.
While the 2008 financial crisis caused significant short-term pain, Iceland’s economy has demonstrated remarkable resilience in the years since. The devaluation of the króna made Iceland a more attractive destination for tourists, leading to a boom in the tourism industry. The government implemented fiscal austerity measures and structural reforms to restore economic stability. According to data from Statistics Iceland, the country’s GDP has steadily grown since 2011, and unemployment has fallen to pre-crisis levels. While the króna remains vulnerable to external shocks, Iceland’s economy is now more diversified and better equipped to weather future challenges.
5.3 Has There Been Any Discussion of Iceland Adopting the Euro?
Yes, there has been ongoing discussion about Iceland adopting the euro as its currency. Proponents argue that it would provide greater economic stability, but there is also resistance due to concerns about loss of monetary sovereignty.
The debate over whether Iceland should adopt the euro has been a recurring theme in Icelandic politics and economics. Proponents argue that adopting the euro would eliminate exchange rate volatility, reduce transaction costs, and provide greater economic stability, particularly for businesses engaged in international trade. However, opponents fear the loss of monetary sovereignty and the ability to tailor monetary policy to Iceland’s specific economic needs. According to a poll conducted by the University of Iceland, public opinion on euro adoption remains divided, with a significant portion of the population favoring the retention of the Icelandic króna.
6. How Does Iceland’s Tax-Free Shopping System Work?
Iceland offers a tax-free shopping system for tourists, allowing them to claim a refund on the value-added tax (VAT) paid on purchases. This can result in significant savings on eligible items.
Iceland’s tax-free shopping system is a valuable perk for tourists, allowing them to reclaim a portion of the value-added tax (VAT) paid on eligible purchases. The VAT rate in Iceland is 24% for most goods and services, but tourists can receive a refund of around 15% of the purchase price. To qualify for a refund, shoppers must spend a minimum amount (currently around 6,000 ISK) at participating stores and obtain a tax-free form. This form must be presented along with the purchased items and a valid passport at the airport upon departure.
6.1 Who is Eligible for Tax-Free Shopping in Iceland?
Tourists who are not residents of Iceland are eligible for tax-free shopping. There are minimum purchase requirements and specific procedures to follow to claim the refund.
To be eligible for tax-free shopping in Iceland, you must be a non-resident tourist. This means that you must have a permanent address outside of Iceland and be visiting the country for a limited period. To claim a VAT refund, you must spend a minimum of 6,000 ISK (approximately $45 USD) at a single participating store. When making a purchase, request a tax-free form from the retailer and present your passport as proof of eligibility. The goods must be exported from Iceland within three months of the purchase date.
6.2 What Items Are Eligible for a VAT Refund?
Most goods purchased in Iceland are eligible for a VAT refund, but there are some exceptions. Food, books, and certain services may not qualify.
The majority of goods purchased in Iceland are eligible for a VAT refund under the tax-free shopping scheme. This includes clothing, souvenirs, electronics, and other retail items. However, certain goods and services are excluded from the refund program. These typically include food and beverages, books, and services such as accommodation and transportation. Additionally, items that are consumed or used within Iceland are not eligible for a refund. Be sure to check with the retailer to confirm whether your purchases qualify for a VAT refund.
6.3 How Do You Claim a VAT Refund When Leaving Iceland?
To claim a VAT refund, you must present your tax-free forms, receipts, and purchased items at the customs desk at Keflavík International Airport before your departure.
Claiming a VAT refund at Keflavík International Airport is a straightforward process. Before checking in your luggage, visit the customs desk located in the departure hall. Present your completed tax-free forms, original receipts, and the purchased items to the customs officer. You will also need to show your passport and boarding pass. The customs officer will verify your documents and stamp the tax-free forms. Once your forms are stamped, you can proceed to the refund counter, where you will receive your VAT refund in cash or credited back to your credit card.
7. What Are Some Tips for Managing Money While Traveling in Iceland?
- Monitor Exchange Rates: Keep an eye on exchange rates to get the best value for your money.
- Use Credit Cards: Take advantage of the wide acceptance of credit cards to avoid carrying large amounts of cash.
- Budget Wisely: Iceland can be an expensive destination, so plan your budget accordingly.
- Take Advantage of Tax-Free Shopping: Claim VAT refunds on eligible purchases.
- Inform Your Bank: Notify your bank of your travel plans to avoid any issues with your cards.
7.1 Are There Any Common Scams or Financial Pitfalls to Be Aware Of?
While Iceland is generally a safe country, tourists should still be aware of potential scams or financial pitfalls, such as inflated prices in tourist areas or fraudulent ATM practices.
While Iceland is renowned for its safety and low crime rate, tourists should still exercise caution to avoid potential scams and financial pitfalls. One common issue is inflated prices in tourist-heavy areas, where businesses may charge exorbitant rates for goods and services. To avoid overpaying, compare prices and patronize local establishments away from the main tourist drags. Additionally, be wary of unsolicited offers or services, as these may be scams designed to prey on unsuspecting travelers.
7.2 Is Tipping Customary in Iceland?
Tipping is not customary in Iceland, as service charges are typically included in the bill. However, you can tip for exceptional service if you wish.
Tipping is not a traditional practice in Iceland, as service charges are typically included in the bill at restaurants, bars, and other service establishments. Unlike in some countries where tipping is expected, Icelandic workers are generally paid a fair wage, reducing the need for supplemental income through tips. While tipping is not required or expected, it is certainly appreciated if you receive exceptional service. If you feel compelled to leave a tip, rounding up the bill or adding a small amount (5-10%) is considered generous.
7.3 What is the General Cost of Goods and Services in Iceland Compared to the United States?
The general cost of goods and services in Iceland is higher than in the United States. Accommodation, food, and transportation can be particularly expensive, so budget accordingly.
Iceland is generally considered an expensive country compared to the United States. According to data from Numbeo, consumer prices in Iceland are approximately 30-40% higher than in the United States. Accommodation, food, and transportation are particularly costly, due to Iceland’s remote location and high import costs. For example, a mid-range hotel room can cost upwards of $200 per night, while a basic meal at a restaurant can easily exceed $30. It’s essential for travelers to factor these costs into their budget and plan accordingly.
8. How Can Money-Central.com Help You Manage Your Finances for a Trip to Iceland?
Money-Central.com offers a range of resources to help you manage your finances for a trip to Iceland, including budgeting tools, currency converters, and articles on saving money while traveling.
Planning a trip to Iceland requires careful financial preparation, and Money-Central.com is here to help you every step of the way. Our website offers a comprehensive suite of tools and resources to help you manage your finances and make the most of your Icelandic adventure. Use our budgeting tools to estimate your travel expenses, track your spending, and stay within your budget. Our currency converter provides real-time exchange rates, allowing you to make informed decisions about when and where to exchange your money.
8.1 What Budgeting Tools and Resources Does Money-Central.com Offer?
Money-Central.com provides budgeting templates, expense trackers, and personalized financial advice to help you plan and manage your travel budget effectively.
8.2 How Can You Use Money-Central.com’s Currency Converter?
Our currency converter allows you to quickly and easily convert between Icelandic króna and other currencies, helping you understand the value of goods and services in Iceland.
8.3 Does Money-Central.com Provide Tips for Saving Money on Accommodation, Food, and Activities in Iceland?
Yes, Money-Central.com offers a variety of tips for saving money on accommodation, food, and activities in Iceland, such as choosing budget-friendly options, cooking your own meals, and taking advantage of free activities.
9. What Are Some Interesting Facts About the Icelandic Króna?
- The Icelandic króna is one of the smallest currencies in the world by economic value.
- Iceland has considered adopting the euro on several occasions but has not yet done so.
- Icelandic banknotes feature unique designs that reflect the country’s history and culture.
- The word “króna” means “crown” in Icelandic, similar to other Scandinavian currencies.
- Iceland’s currency experienced significant volatility during and after the 2008 financial crisis.
9.1 How Does the Size of Iceland’s Economy Affect the Króna?
Iceland’s small economy makes the króna more susceptible to fluctuations and external economic shocks. This can lead to volatility in exchange rates.
The relatively small size of Iceland’s economy has a significant impact on the stability and value of the króna. With a population of just over 360,000 people and a GDP of around $25 billion, Iceland’s economy is highly susceptible to external shocks and fluctuations in global markets. The króna is considered a “small” currency, meaning that it is less liquid and more volatile than major currencies like the U.S. dollar or the euro. This volatility can make it challenging for businesses and consumers to plan for the future and can lead to fluctuations in import and export prices.
9.2 What Role Does Tourism Play in the Value of the Icelandic Króna?
Tourism plays a significant role in the value of the Icelandic króna. Increased tourism can strengthen the currency, while decreased tourism can weaken it.
Tourism has become a vital pillar of the Icelandic economy, and its impact on the value of the króna cannot be overstated. In recent years, Iceland has experienced a surge in tourism, with millions of visitors flocking to the country each year to experience its stunning landscapes and unique culture. This influx of tourists has led to increased demand for Icelandic króna, as visitors exchange their foreign currencies for local currency to pay for goods and services. The increased demand for króna has helped to strengthen its value against other currencies.
9.3 How Has Iceland Managed Its Monetary Policy Since the 2008 Crisis?
Since the 2008 crisis, Iceland has implemented various monetary policies to stabilize the króna and support economic recovery, including capital controls and interest rate adjustments.
Since the 2008 financial crisis, the Central Bank of Iceland has implemented a range of unconventional monetary policies to stabilize the króna and promote economic recovery. One of the most notable measures was the imposition of capital controls, which restricted the flow of capital in and out of the country. These controls were designed to prevent a further collapse of the króna and protect the domestic financial system. While controversial, the capital controls were credited with helping to stabilize the currency and create a more predictable economic environment.
10. FAQ About Iceland Money
10.1 What is Iceland money called?
Iceland money is called the Icelandic króna (ISK).
10.2 What are the denominations of Icelandic banknotes?
Icelandic banknotes come in denominations of 500, 1,000, 2,000, 5,000, and 10,000 krónur.
10.3 Are credit cards widely accepted in Iceland?
Yes, credit cards are widely accepted in Iceland, even for small purchases.
10.4 Is tipping customary in Iceland?
No, tipping is not customary in Iceland, as service charges are typically included in the bill.
10.5 How can tourists claim a VAT refund in Iceland?
Tourists can claim a VAT refund by presenting their tax-free forms, receipts, and purchased items at the customs desk at Keflavík International Airport before their departure.
10.6 What is the currency code for the Icelandic Króna?
The currency code for the Icelandic Króna is ISK.
10.7 What security features are on Icelandic Banknotes?
Icelandic banknotes have several security features, including watermarks, security threads, and microprinting.
10.8 Where can I exchange currency in Iceland?
You can exchange currency at banks, currency exchange offices, and Keflavík International Airport.
10.9 What is the role of the Central Bank of Iceland?
The Central Bank of Iceland manages and regulates the Icelandic króna, implements monetary policy, and maintains the stability of the financial system.
10.10 How did the 2008 financial crisis affect the Icelandic Króna?
The 2008 financial crisis led to a sharp devaluation of the Icelandic króna and caused considerable economic turmoil in Iceland.
Understanding the Icelandic króna is essential for anyone planning to visit Iceland or conduct business with Icelandic companies. By familiarizing yourself with the currency, exchange rates, and financial practices, you can ensure a smooth and enjoyable experience in this beautiful country. For more information and financial tools, visit money-central.com.
Conclusion
Understanding “What Is Iceland Money Called” and its intricacies can greatly enhance your travel or business endeavors in Iceland. From its historical roots to its modern-day management, the Icelandic króna plays a vital role in the nation’s economy. With the resources and tools available at money-central.com, managing your finances for an Icelandic adventure has never been easier. Whether you’re planning a trip, considering business opportunities, or simply curious about global currencies, we hope this guide has provided valuable insights into the world of the Icelandic króna. Don’t forget to explore our other articles and tools for more financial guidance, and embark on your financial journey with confidence. Visit money-central.com today and take control of your financial future.
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