Iceland's Ministry of Finance and Economic Affairs publishes expert report finding costs of the krona likely exceed benefits of an independent currency

Iceland's Ministry of Finance and Economic Affairs has published an expert group's report on Iceland's currency options, concluding that the costs of the Icelandic krona are substantial and likely on average exceed the benefits of retaining an independent currency. The report is intended to inform debate on Iceland's future currency arrangements and compares an independent currency with membership in a larger currency area, including the euro area. The report finds that the krona's exchange rate does not generally support economic stability except in major shocks and that exchange rate movements have often amplified rather than reduced the impact of economic disturbances. It says adopting the euro could bring lower interest rates, lower transaction costs, greater stability and better access to financial markets, but would require Iceland to give up independent monetary policy and shift more responsibility for stability to fiscal policy, the labor market and other economic management. Labor market reforms are presented as necessary regardless of the exchange rate framework and as a precondition for successful participation in a monetary union. The ministry will hold a public conference at Harpa on 2 June to discuss the report. Catherine L. Mann, who led the international expert group, is scheduled to present the main findings and join a panel, alongside addresses from the Minister of Finance and Economic Affairs, the Governor of the Central Bank of Iceland and the European Central Bank.