Discover the Iceland Krona (ISK): A Complete Guide to Iceland's Unique Currency

Thomas J Catalano is a Certified Financial Planner (CFP) and Registered Investment Adviser based in South Carolina, who founded his financial advisory firm in 2018. His expertise spans investments, retirement planning, insurance, and comprehensive financial strategies.

What Exactly Is the Iceland Krona (ISK)?

The Iceland Krona, abbreviated as ISK and symbolized by kr or Íkr, is the official currency of Iceland. It was introduced in 1918 following Iceland's separation from the Danish krone. The currency is issued and regulated by the Central Bank of Iceland, which ensures its stability and oversees monetary policy.

Banknotes come in denominations from 500 kr to 10,000 kr, while coins range from 1 kr to 100 kr. Unlike many currencies, the Iceland Krona operates with a floating exchange rate, meaning it is not pegged to any other currency.

Key Highlights

• The Iceland Krona is Iceland's official national currency.
• It is represented by the symbols kr and Íkr, with the international code ISK.
• The Central Bank of Iceland manages the issuance and value of the krona.
• Banknotes range from 500 kr to 10,000 kr; coins range from 1 kr to 100 kr.
• The currency was established in 1918, replacing the Danish krone.

Understanding the Structure of Iceland's Currency

The krona is subdivided into 100 aurar, although aurar coins were discontinued in 2003. Banknotes are available in 500, 1,000, 2,000, 5,000, and 10,000 kr denominations, while coins are issued in 1, 5, 10, 50, and 100 kr.

The Central Bank of Iceland, founded in 1961 and known locally as Sedlabanki Islands, holds exclusive rights to print banknotes and regulate the currency. Coin minting responsibilities transferred to the National Treasury in 1967. The bank also manages Iceland’s monetary policy and financial stability.

Despite being geographically in Europe, Iceland is not part of the European Union and therefore does not use the euro. The krona freely floats in the currency markets without fixed exchange rates.

Note:

There have been political discussions about Iceland joining the EU and adopting the euro, but no definitive steps have been taken so far.

A Brief History of the Iceland Krona (ISK)

Initially, Iceland used the Danish krone starting in 1874 after replacing the rigsdaler. Iceland began issuing its own version of the Danish krone in 1885. After gaining autonomy in 1918, Iceland introduced the Iceland Krona as a separate currency. The first coins were minted in 1922.

The Central Bank of Iceland took over currency issuance in 1961, with minting duties transferred in 1967. The currency underwent revaluation in 1981. Aurar coins were phased out by 2003 and are no longer legal tender.

The krona is sometimes called the Icelandic Crown due to the Latin root of “krona” meaning crown.

Iceland’s Currency Crisis of 2008

The 2008 global financial crisis severely impacted Iceland’s economy, with its three major banks collapsing due to liquidity problems. This crisis was particularly severe given Iceland’s small economy and population.

Before 2008, the krona traded between 75 and 85 kr per euro. By September 2008, it lost over a third of its value, with inflation spiking to nearly 15%. By October, the krona plummeted to over 300 kr per euro.

Currency trading was suspended, and Iceland received emergency aid from the International Monetary Fund (IMF) and European nations. Restrictions on ISK trading persisted into the mid-2010s.

Since then, Iceland’s economy has recovered, and the krona has stabilized. As of May 2022, 1 USD equaled approximately 131.35 kr.

Visual Features of Icelandic Currency

Icelandic banknotes feature prominent historical figures on the front and scenes or activities related to them on the reverse. Coins and notes come in various denominations, catering to everyday transactions.

Does Iceland Use the Euro?

No, Iceland maintains its own currency, the Iceland Krona (ISK), and is not part of the Eurozone. Visitors can easily exchange major currencies like USD, EUR, and GBP for ISK within Iceland.

How Much Money Should You Bring to Iceland?

Travel expenses vary, but budget travel sources recommend allocating approximately $170 per day for daily expenses excluding airfare and accommodation. This estimate helps ensure a comfortable visit while exploring Iceland.

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