After the financial crisis in 2008 strict capital controls have been in place in Iceland. There is a lot of money in the Icelandic economy that is eager to get out. Foreigners have a lot of assets in Iceland and many of them want to get their money out, but the Icelandic pension funds also want to invest abroad but they are locked in. If the capital controls were removed the ISK could depreciate considerably which would have very damaging effects on the economy. The IMF has suggested to keep the capital controls for at least three more years.
The Social Democratic Alliance, who are currently in government, want to join the EU and the EMU and exchange the ISK for the Euro. The European Central Bank could then assist in removing the capital controls.
The Independence Party, the party with the biggest support in Iceland according to recent polls, wants to exchange the ISK for either the US dollar or the Canadian dollar. However, it is uncertain if Iceland can get bilateral agreements and might have to start using dollars unilaterally. Mr. Mar Gudmundsson, the governor of the Central Bank of Iceland, has said that using another currency unilaterally is not feasible, for example because of problems related to removing the capital controls.
In the suggestions from the Independence Party it says:
"The Icelandic króna cannot be the future currency of the nation if Iceland wants to have the possibility of participating in international competition and providing the nation income on the international market. Now, five years after the capital controls were put in place "temporarily" and no credible solution has been put forward regarding their removal, it is necessary that the Independence Party takes the initiative and explore all possibilities available to Iceland regarding currency issues. The National Meeting [of the party] thinks that the Independence Party is obliged to put the removal of the capital controls at the top of the priority list if the party will be in the next government. In that respect the National Meeting thinks that preparations should be taken regarding using an international currency in Iceland, instead of the Icelandic króna. The international currencies that are being considered are for example the US dollar, the Euro, the British pound, the Norwegian krona and the Canadian dollar. The National Meeting finds it natural that the Independence Party explores specifically the benefits and options available regarding using the Canadian dollar and the US dollar."