Thursday

25th Aug 2016

Reykjavik: ECB must prop up krona until Iceland joins euro

  • Mackerel: the EU and Iceland are on the verge of a fish war (Photo: Richard Ling)

The Icelandic foreign minister has said that the European Central Bank must prop up the krona, the country's bedevilled currency, once the island joins the European Union and until it adopts the euro.

Ossur Skarphedinsson made the comments on Sunday to Visir, a local tabloid newspaper, saying that during the ongoing accession talks with Brussels, he was underlining this point with European negotiators.

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He told the paper of the need to "reach a conclusion about the manner in which the European Union and Europe Central Bank could improve the Icelandic foreign exchange market. It would immediately begin to improve the situation here at home and prepare for introduction of the euro."

He added however that negotiations will almost certainly take longer than anticipated so that the 18-month time frame some had hoped for will probably be exceeded.

Mr Skarphedinsson said the two trickiest issues are proving to be fisheries, as expected, and agriculture.

Talks on both subjects should begin by next Easter, he said, and conclude by autumn 2011.

"I am now optimist as you know, but I think these will not go so quickly," said Mr Skarphedinsson. "And I think this means that talks will be longer and harder than many expected."

Discussions got off to a rocky start when Brussels warned it could block access for Icelandic and Faroe Islands fishermen to EU waters if they do not back down on plans to boost their mackerel catch just weeks after talks began.

Seas warmer than usual this year have seen a migration of mackerel out of EU waters to cooler more northerly territories fished by Icelanders and Denmark's Faeroese, who have both upped their mackerel catch allowances in response, angering Brussels.

UK papers in recent days have warned that Britain and the EU are on the verge of a mackerel war with the small north Atlantic nation.

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