Detailed Information About the Icelandic Currency
Updated: Dec 4, 2020
Iceland is a Scandinavian island located north of Europe. Its charm owes mainly to the location. High volcanic activity, numerous hot springs and powerful waterfalls attract many tourists every year. You can as well witness the delightful phenomenon of the Northern Lights like nowhere else. It became one of the most popular destinations. Every great traveller has a trip around Iceland on his bucket list.
A multitude of tourist attractions makes you want to visit Iceland from the very reading about it or just watching the photos. Before you start packing your suitcases, you should know a few things about Iceland. Planning a trip is also preparing your budget and we all know that travelling to Iceland is not the cheapest thing. In this article we will focus on one of the most important aspect- Icelandic official currency.
What is the official currency of Iceland?
The official currency of Iceland is Icelandic króna with the ISO code - ISK. It is not well recognized by many people but it is also related to the fact that Iceland is the least populated country with its own currency and which conducts independent monetary policy.
The history of the Icelandic currency is related to Iceland’s independence and autonomy from Denmark.
The currecnt Icelandic currency has been in circulation from 1918 after regaining the independence. It’s name indicates the connection between the monetary unit and the monarchy.
Well, let’s see how it all started shall we? In 1873 an important event took place, namely, the creation of the Scandinavian Monetary Union between Denmark and Sweden. Two years later Norway joined the union as it was depending on Sweden. Iceland had to join it to as it was still under Danish control. The union proved to be quite permanent and survived until the beginning of the First World War.
Denmark introduced then a new currency which was Danish krone. Iceland was getting more and more autonomy after the Constitution in 1874 and reation of the Landsbanki Íslands (bank of Iceland) in 1885.
1918 brought the independence to the country and as a consequence, also changed the currency to Icelandic króna.
How the Icelandic money look like?
One might say our money is quite pretty. And indeed, many of the tourists coming to Iceland, keep one note as a souvenir. Icelandic krona is devided into notes and coins as in most of the countries.
All the coins have the image of seafood at he back side, dolphins, crabs etc. On others you will find four country’s protective spirits. You will agree that it looks quite unique right? Unlike in other countries, in Iceland the design on the money haven’t changed for many years. Icelandic 1 krone haven’t been changed for like 36 years.
Icelandic notes are quite narrow and long comparing with other currencies. The circulation includes 500, 1000, 5000 and 10000 Icelandic krona. On the first note, you will find the leader of the Icelandic independence movement Jona Sigurdsson. On the 1000 you will find Bishop of the seventeenth century - Brynjólfur Sveinsson. 5000 note is reserved for Ragnheidur Jónsdóttir, a women, famous activist and the last one, 10000 note is taken by Jónas Hallgrimson who was a poet who also took part in the independence movements.
Who issues Icelandic króna?
Icelandic currency is issued by Bank of Iceland with its headquarters in the capital- Reykjavik.
Based on the legal Act from 2001, Bank of Iceland is an independent institution and is not in charge of financing government expenditures. The priority of the monetary policy is the stability of the prices.
The Central Bank in addition to conducting monetary policy and controlling the emission of money, also has many other functions It is responsible for the debt management, monitoring the stability of the financial system and controlling the state budget.
What is the exchange rate of the Icelandic Krona and where to exchange it?
Most of the people travelling to Iceland decide to exchange their money directly at the International airport as it is the easiest way, right?
The advantage of money changing offices from the airport is that they have a wide selection of foreign currency. Well, you will certainly want to avoid that as you will not get a good rate there. The counters at the airport take advantage of the people who need at least a bit of cash to get some food or coffee and the rates are really low and the commissions are high.
You can as well exchange your money before your trip to Iceland in your home country. Check and observe the currency exchange rate tendency and try to find the day when the rate is the most advantageous. This option is the most recommendable.
Another option is to exchange your money in the bank from the following currencies: British pounds (GBP), Canadian and US Dollars (USD), Danish Krones (DKK), Swednish Krona (SEK), Euros (EUR), Norwegian Krone (NOK). Do not be surprised if you are asked for the passport or ID card when exchanging your money in a bank. A person making payment by a card issued outside of Scandinavia may also be asked for an identity document. Beware though, that the commission charged by the bank is often unfavourable.
Iceland is quite an expensive country and the exchange rate from most of the foreign currencies, is not favourable. Thus you need to make sure you prepared your budget well and with enough cash reserve.
The current exchange rate for the most common currencies look as follows:
1 EUR = 136.390 ISK
1 USD = 121.771 ISK
1 NOK = 13.9786 ISK
1 GBP = 159.430 ISK
Cash or card?
Making payments in Iceland is not a problem at all. Cash and cards are common and ATMs are available 24 hours a day.
Debit and credit card are widely accepted and even in small gasoline stations and local shops you can easily use them without having to have cash on you.
Check if you can use your credit card abroad with no commission charged for the foreign transactions. Some of the camper rental companies accept cash payments for the rental but require a valid credit card for the security imprint. We have wrote an article whether the credit card in needed in terms of RV rental in Iceland.
Tax- free shopping in Iceland
When travelling to Iceland apart from photos and good memories, you would like to bring some souvenirs right? Usually those are clothes souvenirs made of wool, mainly our famous Lopapeysa. Not everyone though know about the tax- free shopping in Iceland and that you can get your tax refund at the International Airport in Keflavik or in the tourist center in Reykjavik. This only applies to non-residents of Iceland who bought products i the last three months and will export them to another country. Everyone who bought clothes and souvenirs worth over 6.000 ISK are entitled for the tax refund. It doesn’t apply to food and beverages so if you now thought you will simply buy alcohol for 6.000 ISK, it will not work. Remember to ask for the receipt in order to claim your VAT back. The refund is usually issued in cash in Icelandic currency but you can ask for a card refund as well. The VAT in Iceland is 25.5 % and for some products it is 7%.
Detailed information about the Icelandic currency
Now that you know everything about the Icelandic currency, you are ready for your trip to Iceland. Remember to exchange your money in advance and to claim for your tax free receipt. In Iceland every penny counts! The more you save, the mode hot-dogs you can get during your trip!