The Icelandic króna is one of the features that distinguishes Iceland economically from many other European countries. Although Iceland participates closely in the European economy and is part of the European Economic Area, it has never adopted the euro as its national currency. Prices in Reykjavík supermarkets, restaurant menus, hotel bills and salaries are still calculated in Icelandic krónur.

A detailed overview of the currency, its history and characteristics is available at . The international currency code is ISK, while prices within Iceland are commonly written using the abbreviation kr. The singular Icelandic word is króna and the plural is krónur.

What is ISK?

ISK is the ISO currency code used internationally for the Icelandic króna. It allows banks, exchange services, payment systems and financial markets to distinguish Iceland’s currency from other currencies also known as crowns or kroner.

The króna belongs to a wider Scandinavian tradition of currencies whose names refer to a crown. Denmark uses the krone, Norway also uses the krone and Sweden has the krona. Iceland uses its own linguistic form, króna.

Despite these related names, the currencies are completely separate today. One Icelandic króna does not have the same value as one Danish, Norwegian or Swedish currency unit.

Who issues Icelandic money?

The Central Bank of Iceland, Seðlabanki Íslands, has the exclusive right to issue banknotes and coins in the country. The institution was established in 1961 and initially received the sole right to issue banknotes.

The right to issue coins was transferred from the National Treasury to the Central Bank in 1967. Since then, the Central Bank has been responsible for the country’s physical currency system.

This includes determining which notes and coins remain legal tender, managing circulation and providing information about the security and design of Icelandic money.

Which banknotes are valid in Iceland?

Five banknote denominations are currently recognised as legal tender: 500, 1,000, 2,000, 5,000 and 10,000 krónur.

The difference between denominations is not limited to numerical value. Each note has its own colour, historical figures and illustrations associated with Icelandic culture, scholarship, art or science.

The current banknote series has its origins in the currency reform introduced at the beginning of 1981. Additional denominations and updated security features were introduced later.

Five coins remain legal tender

Iceland also has five valid coin denominations: 1, 5, 10, 50 and 100 krónur. Lower-value aurar coins disappeared from everyday circulation more than two decades ago.

Icelandic coins are especially interesting because their design connects national mythology with the country’s relationship with the sea. The obverse sides use representations of Iceland’s traditional guardian spirits, while the reverse sides feature marine life.

This creates a visual identity very different from currencies dominated entirely by portraits of political leaders or monarchs.

The four guardian spirits on Icelandic coins

The landvættir, or guardian spirits of Iceland, originate from medieval Icelandic tradition and are also represented on the national coat of arms.

They are traditionally described as a dragon, a giant, a bull and a bird of prey. Together, they guard the four quarters of Iceland.

Stylised versions of these figures appear on Icelandic coins. Their use connects modern everyday money with stories preserved in Iceland’s medieval literary heritage.

Why fish appear on the coins

The reverse sides of Icelandic coins contain images of marine species. The 1 króna coin features a cod, while other denominations depict species including dolphins and capelin.

The choice reflects Iceland’s historical dependence on the sea. Fishing has played a central role in employment, exports, settlement patterns and the country’s economic development.

Marine imagery therefore has more than decorative value. It represents a resource that influenced Icelandic society for generations.

People on Icelandic banknotes

Banknotes follow a different design principle. Instead of concentrating on political rulers, Icelandic notes feature individuals connected with the country’s cultural, artistic and intellectual history.

The personalities represented include scholars, artists and important figures in Icelandic cultural development. Reverse designs provide additional historical or artistic context connected with the person shown on the front.

As a result, the banknotes can function almost like small pieces of cultural history carried in a wallet.

Jón Sigurðsson is hidden in every note

One important Icelandic statesman appears on the entire current series in a less obvious form. All valid Icelandic banknotes contain a watermark portrait of Jón Sigurðsson.

Born in 1811, Jón became the most important nineteenth-century figure associated with Iceland’s campaign for greater independence from Denmark. His birthday, 17 June, was later selected as the date on which the Republic of Iceland was established in 1944.

His watermark therefore adds a national historical symbol while also functioning as a security feature.

How banknotes are protected

Modern banknotes need to be difficult to reproduce convincingly. Icelandic notes therefore incorporate multiple security elements rather than relying on a single feature.

Watermarks, security threads, detailed printing, microtext and other elements help users and financial institutions identify genuine notes. Some denominations have received updated security features over time.

The design challenge is to combine these technical requirements with artwork that remains recognisably Icelandic.

The designers behind Icelandic money

The current banknote series was designed under the direction of Kristín Þorkelsdóttir together with Stephen A. Fairbairn. The coins were designed by Icelandic artist Þröstur Magnússon.

The visual consistency of the currency is therefore intentional. Notes share related design principles even though they depict different individuals and scenes.

The coins follow their own unified concept through the combination of guardian spirits and marine animals.

Why Iceland uses krónur rather than euros

Iceland is geographically European and has close economic connections with European Union countries, but it is not a member of the EU and does not belong to the euro area.

The country participates in the European Economic Area through its membership of the European Free Trade Association. This provides extensive access to the European single market without requiring Iceland to replace the króna with the euro.

As a result, travellers arriving from eurozone countries still need to think in ISK when comparing local prices.

Cash is legal, but cards dominate everyday payments

Visitors may be surprised by how little physical Icelandic money they actually need during a trip. Electronic payment is deeply established in everyday life.

Cards and contactless payments are accepted at supermarkets, restaurants, petrol stations, hotels and many other businesses. Even relatively small transactions are commonly completed electronically.

Cash nevertheless remains legal tender and continues to circulate. The existence of highly developed digital payment infrastructure has reduced its everyday visibility rather than eliminated the national currency itself.

Do tourists need Icelandic cash?

For most ordinary trips, carrying large quantities of cash is unnecessary. International payment cards can generally be used for everyday purchases in Iceland.

Some travellers still prefer to have a small amount of krónur available as a backup or simply because using local currency is part of the travel experience.

Visitors who withdraw cash should remember that exchange rates and bank fees can influence the final cost of obtaining ISK.

Foreign currencies are not the normal means of payment

Tourists should not assume that euros, US dollars or British pounds can routinely replace Icelandic krónur. Individual tourism businesses may occasionally accept foreign cash, but this is not the standard payment system.

Prices are normally quoted in ISK, and card transactions are processed accordingly. Using a payment card or obtaining Icelandic currency is therefore more reliable than depending on foreign banknotes.

When a payment terminal offers currency conversion, travellers may also want to compare the displayed conversion with the rate provided by their own bank.

Why Icelandic prices can look unusually large

A coffee may cost hundreds of krónur and a restaurant bill can easily reach several thousand. For visitors accustomed to euros, pounds or dollars, the numbers can initially appear surprisingly high.

This does not mean that the amount has the same purchasing power as the equivalent numerical value in another currency. Currency units have different scales.

Travellers therefore need to convert the price using the current exchange rate rather than interpreting the number by itself.

The exchange rate is not permanently fixed

The Icelandic króna has a market-determined exchange rate. Its value against currencies such as the euro, US dollar and British pound can change over time.

The Central Bank of Iceland publishes official reference exchange rates on business days. These rates provide an indication of market value but do not necessarily equal the exact rate offered to a traveller by a commercial bank or card provider.

Exchange services can include their own margins and fees, meaning the effective price of currency conversion may differ between providers.

A small currency in a small economy

The króna belongs to a country with a population far smaller than that of most major currency areas. This naturally makes the ISK market much smaller than markets for currencies such as the US dollar or euro.

Developments in tourism, exports, imports, interest rates and international financial conditions can influence demand for the currency.

The króna therefore reflects both Iceland’s domestic economy and its economic relationships with the rest of the world.

The historical roots of the word króna

The history of the modern Icelandic currency is connected with monetary reforms across Scandinavia in the nineteenth century. Danish monetary legislation introduced the króna-based system in Iceland in the 1870s.

The new unit replaced older monetary terminology and was divided into 100 aurar. Related crown-based currencies were introduced within the Scandinavian monetary framework.

At that time, Iceland was still politically connected with Denmark, so the development of its currency cannot be separated from wider Danish and Nordic monetary history.

Icelandic banknotes appeared before full sovereignty

Icelandic paper money has a history extending back well before the Republic of Iceland was founded in 1944.

Domestic institutions began issuing Icelandic banknotes during the late nineteenth century. Currency arrangements changed further as Iceland gained greater political and economic autonomy.

The development of Icelandic money therefore occurred alongside the country’s gradual movement from Danish rule toward sovereignty and republican independence.

1918 changed Iceland’s political status

The Danish-Icelandic Act of Union recognised Iceland as a sovereign state in 1918. Iceland and Denmark remained connected through the same monarch, but Iceland’s constitutional status had fundamentally changed.

Monetary development increasingly reflected the country’s separate economic identity. Icelandic banknotes and coins evolved through the following decades as the financial system became more independent.

In 1944, Iceland formally became a republic, ending the remaining constitutional connection with the Danish monarchy.

Why Iceland needed a currency reform

During the twentieth century, inflation significantly reduced the purchasing value of the Icelandic króna. Prices increasingly required larger numerical amounts, making the existing unit less convenient.

The solution was redenomination. Instead of creating an entirely new currency with a different national identity, Iceland changed the scale of the existing króna.

The reform came into effect at the beginning of 1981 and created the basis of the currency system still used today.

The 100-to-1 change of 1981

Under the 1981 currency reform, 100 old krónur became 1 new króna. Prices, bank balances and physical money were converted according to this ratio.

New banknotes and coins were introduced as part of the change. The reform made monetary values easier to express after years of inflation had increased nominal prices.

The króna retained its name, which meant Iceland could simplify the currency without abandoning a familiar national monetary identity.

The beginning of today’s banknote series

The current Icelandic banknote design tradition began with the 1981 reform. Notes of 10, 50, 100 and 500 krónur were initially introduced.

As prices and payment habits changed, the denomination structure evolved. A 1,000 króna note followed in 1984, and a 5,000 króna banknote was introduced in 1986.

Later additions included the 2,000 and 10,000 krónur notes, while the smallest paper denominations were gradually replaced by coins or withdrawn.

Why there is a 10,000 krónur note

The 10,000 krónur banknote is the highest-value note currently valid in Iceland. It was introduced in 2013 as the denomination structure adapted to modern price levels.

The note features Jónas Hallgrímsson, a nineteenth-century Icelandic poet and natural scientist. Its imagery combines literary and scientific themes.

The choice continues the Icelandic tradition of using banknotes to highlight figures associated with national culture rather than relying primarily on heads of state.

The unusual 2,000 krónur note

The 2,000 krónur denomination occupies an interesting position within Icelandic currency. It remains legal tender even though it is encountered less frequently than several other notes.

The banknote features Icelandic painter Jóhannes S. Kjarval, one of the country’s best-known twentieth-century artists.

Its design therefore extends the cultural theme of the series from literature and scholarship into visual art.

Small banknotes disappeared

The 1981 series originally contained 10, 50 and 100 krónur banknotes. Over time, such small values became increasingly impractical as paper money.

Coins replaced these denominations in everyday circulation. The Central Bank stopped issuing new 10 krónur notes in the 1980s, followed by the 50 and 100 krónur denominations.

The remaining 10, 50 and 100 krónur banknotes were formally withdrawn from circulation in 2007.

What happened to the aurar?

Historically, one króna was divided into 100 aurar, with eyrir as the singular form. The relationship was similar in principle to cents and dollars.

Inflation gradually made the small units economically insignificant. The remaining 5, 10 and 50 aurar coins were withdrawn from circulation in 2003.

Today, the 1 króna coin is the smallest unit of Icelandic cash in circulation. Consumers therefore do not use aurar for normal physical payments.

Currency and Icelandic national identity

Money is primarily a practical instrument for purchasing goods and measuring value, but national currencies can also carry cultural meaning. Iceland provides a clear example.

The name króna reflects Nordic monetary history. The banknotes depict Icelandic intellectual and cultural figures. The coins use guardian spirits and marine species, while Jón Sigurðsson appears as the watermark on the notes.

Together, these details transform ordinary payment instruments into objects containing references to Iceland’s history, literature, mythology and natural environment.

The sea on one side and mythology on the other

The coin series provides perhaps the clearest summary of Iceland’s national imagery. Marine animals represent the economic and cultural importance of the North Atlantic, while the guardian spirits connect the currency with medieval tradition.

This contrast reflects two different aspects of the country: a society whose economy historically depended heavily on fishing and a culture famous for preserving medieval literature and mythology.

Even a small-value coin can therefore contain several layers of Icelandic symbolism.

Banknotes as miniature historical documents

The notes offer another way of presenting national history. Portraits introduce people associated with scholarship, literature, art and Icelandic intellectual development.

Scenes on the reverse add further context, while design details provide information about particular periods of Icelandic cultural life.

For visitors, examining the notes can therefore become an unexpected introduction to people and subjects they may later encounter in museums or historical sites.

The króna during Iceland’s financial crisis

The importance of an independent currency became particularly visible during Iceland’s financial crisis in 2008. The country’s banking system experienced a severe collapse and the króna depreciated sharply.

The crisis demonstrated how strongly exchange-rate movements can affect a small economy that imports many goods while depending on export sectors for foreign currency earnings.

It also intensified domestic discussion about Iceland’s monetary system and whether the country should retain the króna or pursue a different long-term arrangement.

Tourism and the value of ISK

Tourism has become an important part of the Icelandic economy. International visitors bring foreign currency into the country through spending on accommodation, restaurants, transport and activities.

Exchange-rate movements can influence how expensive Iceland feels to foreign travellers. A stronger króna can make the same hotel room or meal more expensive when converted into euros or dollars, while a weaker currency can have the opposite effect.

This means the exchange rate matters not only to financial markets but also to ordinary travel decisions.

Using ATMs in Iceland

Travellers who prefer cash can withdraw Icelandic krónur from ATMs. Before accepting a withdrawal, it is useful to check whether the machine or the traveller’s own bank charges additional fees.

Currency conversion can also affect the final cost. Some systems offer to convert the transaction immediately into the cardholder’s home currency, while others allow the card issuer to perform the conversion.

Understanding these options can help visitors avoid unnecessary exchange costs.

Why the króna still matters in a digital economy

The declining use of cash does not mean the national currency is disappearing. A card payment of 5,000 krónur is still denominated in ISK even when no physical banknote changes hands.

Digital payments simply change the form in which money is transferred. Prices, wages, taxes, bank deposits and financial contracts continue to use the Icelandic currency.

The distinction between cash and currency is therefore important: Iceland may be highly cash-light while remaining firmly based on the króna.

A currency visitors remember

The Icelandic króna often becomes part of the travel experience because its denominations and designs are unfamiliar to visitors. Prices involving thousands of units may initially require mental conversion, while the images on coins and banknotes provide an introduction to Icelandic culture.

In practical terms, using ISK is straightforward because electronic payment is widespread. The greater challenge for travellers is understanding what prices represent in their own currency and how exchange rates affect their budget.

For Iceland itself, however, the króna is more than a travel curiosity. It remains the monetary unit used throughout the economy and an important symbol of the country’s separate economic identity.

The Icelandic króna today

Modern Icelandic money combines several historical periods. The word króna reaches back to nineteenth-century Nordic monetary reform, the current series developed from the 1981 redenomination and the images on physical currency reach even further into Icelandic history and mythology.

At the same time, most everyday payments now take place electronically. This creates an interesting contrast: Iceland retains a distinctive national currency with culturally rich physical designs while operating one of the environments where travellers may have very little need to handle cash.

The króna has survived inflation, redenomination, financial crises and major changes in payment technology. Today it continues to serve as Iceland’s unit of account, means of payment and one of the country’s most recognisable economic symbols.

More factual guides to national currencies, their histories, denominations and distinctive features can be found at , the Currencies section of Znaki FM.