The official currency of Iceland is the Icelandic króna (ISK). The króna is a unique currency in that it’s only used in Iceland. It’s subdivided into 100 aurar, but the aurar coins are no longer in circulation. The banknotes come in denominations of 500, 1000, 2000, 5000, and 10,000 krónur.
The Icelandic currency, known as the króna (ISK), has a long and interesting history. The króna separated from the Danish krone after the dissolution of the Scandinavian Monetary Union at the start of World War I and Icelandic sovereignty from Denmark in 1918. Whether you are a visitor to Iceland or a resident, it is important to understand the history and current status of the króna.
Historical Journey of the Icelandic króna
The currency of Iceland is called the Króna, often referred to by its code ISK. It shares its name origin with other Scandinavian currencies like the Swedish krona, Danish krone, and Norwegian krone.
In Iceland, the use of cash is rare as the country heavily relies on debit and credit cards for transactions. The Icelandic currency consists of both coins and banknotes. Coins come in denominations of 1, 5, 10 (silver), 50, and 100 (gold) króna. Banknotes are available in denominations of 500, 1000, 2000, 5000, and 10000 króna.
History of Coins
Iceland originally used the Danish krone when it was under Danish rule but started issuing its banknotes in 1885. After gaining autonomy from Denmark in 1918, Iceland adopted the Icelandic króna as its official currency. The first Icelandic coins were introduced in 1922.
The currency has undergone several changes over the years, including devaluations and revaluations, to manage inflation and economic challenges. In 1981, due to high inflation, the króna was revalued, with 100 old króna (ISJ) being worth 1 new króna (ISK).
Icelandic coins have evolved, with the first coins being the 10 and 25 aurar pieces in 1922, followed by 1 króna and 2 króna pieces. Post-1981, coins were introduced in denominations of 5, 10, 50 aurar, 1 króna, and 5 króna.
The coins have been redesigned over time, such as in 1946 when the royal monogram was removed following Iceland’s independence in 1944.
Banknotes have also changed, with the first notes issued in 1885 in denominations of 5, 10, and 50 króna. Over the years, higher denominations were introduced, including 500, 1000, 5000, and 10000 króna notes.
Coins of less than one króna are no longer in circulation, and aurar coins were phased out in 2003. The current circulating coins include 1 króna, 5 króna, 10 króna, 50 króna, and 100 króna, each featuring different designs and specifications.
History of Bills
Icelandic banknotes are unique in that they include the dates of the legal basis for the currency. In 1981, banknotes were issued in denominations of 10, 50, 100, and 500 krona, following the law from 1961. Later, in 1984 and 1986, 1000 and 5000 krona notes were introduced respectively.
100, 500, and 1000 krona notes were reissued under a new law from 1986. A year later, a 2000 krona note was introduced for the first time, featuring distinctive design elements like multi-color printing and microprint.
Significant changes were made to the banknotes in 2001, including enhanced underprint and microprint features across all denominations, as well as metallic foils on the 1000 and 5000 krona notes.
In 2013, a new 10000 krona note was released, featuring Jónas Hallgrímsson, a renowned natural scientist and poet. This note also included images of the Eurasian golden plover. Lower denomination notes of 100 krona and less are no longer in circulation, as they have been withdrawn.
Each series of banknotes is characterized by distinct colors and designs, featuring notable Icelandic historical figures and scenes. The designs and dimensions vary with each denomination, reflecting various aspects of Icelandic culture, history, and nature. The watermarks generally feature Jón Sigurðsson, a prominent figure in Icelandic history.
Inflation and Buying Power of Icelandic króna
According to Inflation Tool, from 1956 to 2022, Iceland experienced significant inflation, totaling 410,693.54%. This means that the value of 100 Icelandic króna in 1956 became equivalent to 410,793.54 króna in 2022. Essentially, what you could buy with 100 króna in 1956 required 410,793.54 króna in 2022 to purchase the same items or services. During this period, the average annual inflation rate in Iceland was 13.44%.
This inflation means that over the years, the purchasing power of the Icelandic króna has diminished significantly. Something that cost 100 króna in 1956 would cost 410,793.54 króna in 2022, showing how the value of the currency has changed due to inflation.
This change in purchasing power is an important consideration for both historical economic analysis and for understanding the current economic situation in Iceland.
Iceland began issuing its banknotes in 1885, moving away from the Danish Krone, marking a step towards independence from Danish rule. In 1918, when Iceland gained autonomy from Denmark, it adopted the Icelandic Króna as its official currency.
The first notes issued were in denominations of 5, 10, and 50 króna, which are now in coin form. The issuance of currency has evolved, with various banks taking responsibility, leading to the introduction of higher denominations and the redesign of coins and banknotes.
The 500 Krónur note features red printing. On the front, it has an image of Jón Sigurðsson, a famous advocate for Iceland’s independence. The back of the note also has red printing, showing Jón Sigurðsson sitting at his desk, with an image of the parliament building towards the bottom right.
The 1000 Krónur banknote features yellow, brown, and purple colors. On one side, there’s a portrait of Brynjólfur Sveinsson, a well-known Lutheran Bishop from Skálholt. On the other side, the note depicts Skálholt Cathedral from the 17th century, showing a side view of the cathedral and some church decorations in the background.
The 2000 Krónur note has a yellow and green backprint with a brown portrait of the painter Jóhannes S. Kjarval, set against a nature backdrop. On the reverse side, the note features yellow, orange, and blue printing. It displays Kjarval’s painting “Yearning for Flight” and his drawing “Woman and Flowers,” with his signature in the bottom right.
The 5000 Krónur banknote has a design that mainly features blue color on a multicolored background. On the front, the main figure is Ragnheiður Jónsdóttir, the third wife of Bishop Gísli Þorláksson. On the back of the note, the design continues with a predominantly blue color on a multicolored background. It shows Ragnheiður Jónsdóttir teaching two girls about embroidery, along with an example of her embroidery book, illustrated in the form of the initials “R I” on the right side.
The 10,000 Krónur note features a portrait of Jónas Hallgrímsson, a natural scientist and poet, on the front.
On the back of the note, there is an image of a plover and the poem “Skjaldbreiður Mountain” by Hallgrímsson, another outline of the mountain Skjaldbreiður, the handwritten poem “Fjallið Skjaldbreiður” by Jónas, and a scallop shell.
Currency Usage in Iceland
The Icelandic króna is the official currency of Iceland. It is abbreviated as ISK and can be written with the currency symbol kr. The currency comes in both coins and bills or banknotes. The coins come in five denominations of 1, 5, 10, 50, and 100 kronur. On the other hand, the banknotes come in denominations of 500 ISK, 1,000 ISK, 2,000 ISK (being removed from circulation), 5,000 ISK, and 10,000 ISK.
While some places in Iceland accept credit cards, it’s always a good idea to carry cash with you, especially if you’re traveling outside of Reykjavik. Many smaller towns and villages may not have ATMs or may only accept cash.
Is USD Accepted in Iceland?
In Iceland, the official currency is the Icelandic króna (ISK). While the US dollar (USD) might be accepted in some tourist-focused businesses like hotels, large stores, or tour operators, it is not widely accepted across the country.
Most transactions are conducted in Icelandic króna. For convenience and to get the best exchange rates, travelers should use the local currency or make payments via credit or debit cards, which are widely accepted throughout Iceland.
Currency exchange services are available at airports, banks, and designated exchange bureaus. Additionally, ATMs are widely accessible for withdrawing local currency.
Exchanging Currency in Iceland
When traveling to Iceland, you will need to exchange your currency to Icelandic króna (ISK). You can exchange your currency at banks, exchange offices, or ATMs. Banks usually have the best exchange rates, but they may charge a commission fee. Exchange offices and ATMs may have higher exchange rates, but they are more convenient and accessible.
Where can I exchange Icelandic króna?
You can exchange your currency at banks, exchange offices, or ATMs. Banks usually offer the best exchange rates, but they may charge a commission fee. Exchange offices and ATMs may have higher exchange rates, but they are more convenient and accessible. You can find banks and exchange offices in major cities and tourist areas. ATMs are widely available throughout the country.
What to know before exchanging currency in Iceland
Before exchanging your currency, there are a few things you should know. Make sure to check the current exchange rate to ensure you are getting a fair deal. You can check the exchange rate at the Icelandic Central Bank website or by using a currency converter app.
When exchanging currency in Iceland, it is best to exchange your currency at banks for the best exchange rates, but exchange offices and ATMs are more convenient and accessible.
Make sure to check the current exchange rate, be aware of any commission fees or hidden charges, and avoid exchanging currency at hotels or tourist shops.
Choosing between USD and Icelandic króna
When it comes to choosing between USD and Icelandic króna for transactions, it’s important to consider the exchange rate. While the exchange rate between USD and ISK can fluctuate, it is generally more favorable to use Icelandic króna for transactions in Iceland. This is because businesses may charge a higher exchange rate or additional fees for transactions in USD.
As a tourist in Iceland, it’s important to understand the exchange rate dynamics of the Icelandic Krona (ISK) and how it affects your spending. The exchange rate is the value of one country’s currency with another country’s currency.
The exchange rate of the ISK can fluctuate based on a variety of factors, such as changes in interest rates, inflation rates, political stability, and economic growth.
For example, if the interest rates in Iceland increase, it may attract foreign investment, which can increase demand for the ISK, leading to an appreciation of the currency.
It’s important to keep in mind that exchange rates can be volatile and can change quickly, sometimes even daily. This means that the amount of Icelandic Krona you can get for your currency may change from day to day.
To help you keep track of exchange rate fluctuations, you can use online currency converters or mobile apps that provide up-to-date exchange rates. It’s also a good idea to check with your bank or credit card company to see if they charge any foreign transaction fees or offer favorable exchange rates.
The official currency of Iceland is the Icelandic króna (ISK). You can exchange your currency for Icelandic króna before arriving in Iceland or at the airport upon arrival.
You can also withdraw Icelandic króna from ATMs throughout the country. Most ATMs accept foreign debit and credit cards, but it is always a good idea to check with your bank beforehand to ensure that your card will work in Iceland.
When exchanging currency or withdrawing money from an ATM, be aware of any extra fees that may be charged. Some banks and exchange offices charge a commission fee or a percentage of the transaction amount. To avoid these extra fees, it is best to exchange money at a bank or use an ATM that does not charge additional fees.
It is also important to be aware of dynamic currency conversion, which is when a merchant offers to charge you in your home currency instead of the local currency. This may seem convenient, but it often comes with a high exchange rate and additional fees.
When using Icelandic currency, it’s useful to have cash on hand since not all places accept cards. Make sure to use Icelandic króna, as other currencies might not be accepted. Always check the current exchange rate for a fair deal when exchanging money or buying something. Keep your receipts from currency exchanges or ATM withdrawals for reference in case of any account discrepancies. These steps will help you use the currency without any issues or extra costs.
Cost of Living in Iceland
If you are planning to move to Iceland or visit the country for an extended period, it’s essential to know the cost of living in Iceland. The cost of living in Iceland is relatively high compared to other countries, especially in terms of food, housing, and transportation. However, the country’s high standard of living, beautiful landscapes, and cultural experiences make it worth the cost.
It’s worth noting that Iceland has a relatively high cost of living, so it’s important to budget accordingly. While credit and debit cards are widely accepted, it’s still a good idea to carry some cash for smaller purchases like snacks, souvenirs, and public restrooms. ATMs are also widely available throughout the country, so you can withdraw cash as needed. Keep in mind that some ATMs may charge a fee for foreign transactions, so be sure to check with your bank before you go.
Iceland’s food and drink prices are relatively high due to the country’s small population and remote location. Eating out in Iceland can be expensive, with the average meal costing around $25-30. However, you can save money by cooking your meals at home. Grocery prices in Iceland are also higher than in other countries, with the average cost of a loaf of bread being around $3 and a liter of milk costing around $1.5.
Housing costs in Iceland are relatively high, with the average rent for a one-bedroom apartment in Reykjavik being around $1,370 per month. However, the cost of housing outside the city center is lower, with the average rent for a one-bedroom apartment being around $1,180 per month. If you plan to rent a larger apartment, you should expect to pay more.
Overall, the cost of living in Iceland is high, but it’s worth the cost for the country’s beautiful landscapes, vibrant culture, and high standard of living. To save money, you can cook meals at home, live outside the city center, and use public transportation.
Don’t get scammed tips
When it comes to currency exchange, there are always risks of scams and fraud. Here are some tips to help you avoid scams while exchanging currency in Iceland.
- Be aware of the most common currency exchange scams in Iceland. One common scam is the “quick change” scam, where a cashier will try to confuse you by giving you incorrect changes. Another scam is the “bait and switch” scam, where a currency exchange operator will offer you a great exchange rate, but then give you a lower rate when you exchange your money.
- Always count your change carefully and double-check the exchange rate before you exchange your money. If you’re not sure about a currency exchange operator, it’s best to find another one. Always exchange your currency at reputable banks or exchange offices.
- Be sure to keep your money safe. Avoid carrying large amounts of cash with you, and keep your money in a secure place such as a hotel safe or a money belt.
By following these tips, you can help protect yourself from currency exchange scams in Iceland.