If the króna fluctuates so much, wouldn't that also indicate that demand for the króna just fluctuates a lot? Presumably, in absence of major conflicts between Iceland and its trading partners, as a result of economic imbalances. Those won't go away if Iceland were to join the eurozone, either as a EU member or via the Kosovo/Montenegro route. It might deprive the Icelandic central bank of a valuable tool to stabilize their economy, by weakening or strengthening their currency as economic circumstances demand. This was a big problem for the southern EU economies back in credit crisis times.
Now there are of course many other considerations that might offset this downside to joining the eurozone. I would personally welcome our Icelandic friends joining the EU (if they chose to), but it's good for them to have a public debate about both the up- and downsides first.
Now there are of course many other considerations that might offset this downside to joining the eurozone. I would personally welcome our Icelandic friends joining the EU (if they chose to), but it's good for them to have a public debate about both the up- and downsides first.