Economics

What is the Currency of Iceland?

The official currency of Iceland is the Icelandic krona.

Description

Iceland’s official currency is the Icelandic krona. The history of this currency indicates that its subdivisions consisted of 100 aurar which are not currently used.

First Krona

The first krona was used during the period of 1874-1981 and it was called the Danish krone. One year after beginning circulation, Iceland introduced its banknotes. In 1922, Icelandic krona underwent a 23% devaluation against the Danish krone. The krona and the British pound were pegged in 1925 for 14 years and it was pegged to the US dollar for ten years.

Coins

The first coins of Iceland’s currency were issued in 1922 in denominations of 10 and 25 pieces of aurar. Later in 1925, the 1 krona piece and 2 kronur pieces came into circulation, and in 1926 coin denominations of 1, 2 and 5 aurar pieces were issued. There was a change in the design of coins in 1946 which involved the removal of the royal monogram (CXR) because Iceland had gained independence in 1944. From 1967, a new series of coins was introduced as a result of the devaluation of the krona. The coins included 10 kronur (in 1967), 50 kronur (in 1969), and 5 kronur (in 1969). In 1970, there was the issuance of the 50 kronur pieces.

Banknotes

In 1885, the first banknotes of Icelandic krona were introduced in 5, 10, and 50 kronur denominations. 100 kronur notes were issued in 1904 when the Bank of Iceland began to manufacture banknotes. In 1921, the notes of 1, 5, 10, and 50 kronur denominations were in circulation produced by Rikissjoour Islands.

In 1928, Landsbanki Islands issued notes in denominations of 5 kronur and above. The bank also gave out notes of 500 kronur in 1935 and banknotes of 25 and 1000 kronur in 195. In 1961, the Central Bank of Iceland introduced notes in the denominations of 10, 25, 100, and 500 kronur produced by De La Rue in England.

Second Krona (1981 to date)

Revaluation of the Icelandic krona took place in 1981 following high inflation during the period. After the revaluation, 1 new krona was equivalent to 100 old kronur. The introduction of the new coinage system took place in 1981 for 5, 10, and 50 aurar and 1 and 5 krona denominations.

Other denominations that came afterward include 10, 50, and 100 kronur issued in 1984, 1987, and 1995 respectively. Banks in Iceland have not accepted the coins in aurar denominations since 2003.

The second series of Icelandic krona banknotes began in 1981, and it consisted of 10, 50, 100, and 500 kronur denominations. In 1984, the denomination issued was 1000 kronur and 2 years later the 5000 kronur notes came into circulation. In 1994, there was re-issuance of 100, 500, and 1000 kronur notes. The 2000 kronur notes were issued one year later. From 2006, the Icelandic krona notes in circulation consisted of 500, 1000, 2000, and 5000 kronur notes.

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