Should Iceland Adopt Canadian Dollar?

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Econ 345 Assignment 2 Topic: Should Iceland adopt Canadian Dollar? Student number: 301238117 Student Name: Shuk Man Chan The Abstract Iceland is now having financial crisis because of its unhealthy banking system and monetary policies. Its currency becomes an unwanted dollar due to its fluctuating exchange rate. To regain the confident and rebuild its financial system, a sound currency is crucial. Canada, one of the strongest economies in OECD, has a healthy banking system and conservative monetary policies. Its currency is greatly approved and accepted by world financial institutions and investors. Even though Canadian Dollar has some weaknesses compared to large economies like U.S or E.U, its advantages are stronger and…show more content…
In 2008, world economic downward has greatly impacted Iceland’s economic. The three biggest banks in Iceland were bankrupt because they were not able to pay the debts. As a result, Iceland banking system collapsed (Holmes & McArdle, 2008). Noted that, most world financial institutions decided to drop Iceland’s credibility. And loan from international market and investment were significantly dropping in Iceland’s financial market. It leaded Iceland’s kroner to become very unattractive. To regain and reconstruct Iceland’s financial system, using Canadian Dollar as its official currency is fundamental since Canadian Dollar is creditable and steady currency. Benefits of Using Canadian Dollar Canada is using flexible exchange system after 1920 (Canada’s economy, 2011). Even though Canada financial system is in flexible exchange system, Canadian Dollar is still one of the strongest and creditable currencies in the world because of its careful global investment policies and vigorous banking system. As Canada is an open economic market, the value of its currency will be determined by its and world economy. Recently, Canada becomes one of the highest growths in its GDP in OECD. The Reason Canada with a strong economic is its sound banking and monetary guidelines, conservative financial framework and openness for trade. In fact, Canada has become one of the highest percentages of

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