Euro adoption would remain years away, former minister says

Adopting the euro would still be many years away if Iceland resumed membership talks with the European Union, former Finance Minister Steingrímur J. Sigfússon said, according to mbl.is.

Steingrímur made the comments at a meeting organised by the association Áfram Ísland at Hof in Akureyri. He said a lengthy process would have to take place before adopting the euro became realistic.

“We can look at how long this process has taken for countries that have joined the European Union,” Steingrímur said. Croatia joined the EU in 2013 but adopted the euro in 2023, after taking considerable time to meet the requirements. Poland, which joined the EU in 2004, is also in no hurry to replace the Polish zloty, he said.

Bulgaria was the latest country to adopt the euro, doing so at the beginning of this year, 19 years after joining the EU in 2007. It became the 21st euro-area country.

Steingrímur said that, even if Iceland resumed membership talks at the beginning of 2027, it would take time to establish committees and begin the process. If negotiations concluded at the end of 2028 or during 2029, assuming they progressed well, a membership agreement could potentially be ready for consideration by mid-2029.

Constitutional amendments and a vote on the membership agreement could then follow in 2029 or 2030. Iceland would also have to meet requirements for low inflation and interest rates, public finances and exchange-rate stability while waiting to adopt the euro as an EU member.

“I therefore find it difficult to imagine the process of adopting the euro taking anything less than several additional years after Iceland joined the EU,” Steingrímur said. Even if everything followed the yes route, he said, it would likely be well into the 2030s before the euro came into use in Iceland.

He said the euro would therefore not have a significant effect on inflation and interest rates for many years.

“It is cheap rhetoric to say that if the yes side wins in the referendum on 29 August, interest rates will fall on 30 August. I find that a rather crude approach,” Steingrímur said.

After Iceland’s economic collapse in autumn 2008, supporters of EU membership and euro adoption placed high hopes in joining the bloc. Some even believed that announcing an application for EU membership could, by itself, strengthen Iceland’s position.