If Iceland joins the European Union, when could it adopt the euro?

If Iceland joins the European Union, when could it adopt the euro?

Countries wishing to adopt the euro must fulfil the Maastricht criteria, relating to price stability, interest rate levels, exchange rate stability, public sector balance, and public debt.

Participation in ERM II (Exchange Rate Mechanism II) for at least two years is a precondition for euro adoption. Experience from the Baltic states suggests that once ERM II conditions are met, euro adoption can proceed relatively quickly. In the case of the Baltic States, for instance, one year passed from joining the European Union to ERM II participation.

In the case of Iceland, it can be assumed that Iceland's experience and participation in the EEA cooperation could potentially lead to a quicker process of joining ERM II. In general, Iceland's participation in the EEA cooperation and the strong institutional framework in Iceland could possibly reduce the need for a time-consuming institutional adjustment in the run-up to particiation in ERM II.

The University of Iceland's Institute of Economic Studies (Hagfræðistofnun HÍ) concluded that interest rates would fall upon membership of the European Union, while Iceland would lose control over its monetary policy. See the institute's report (in Icelandic.