Interest rates are, in principle and regardless of important institutional effects, the price you w

Taps, like the vast majority of currencies, issued by the government. The basis for its existence is the same as most other currencies over time: you, a resident of Iceland, pays taxes in your currency. If you pay them not go in stone and that most people will end in tugthúsinu creates this demand for currency. Private entities have to pay taxes so the government follow up and install contracts where the amounts are denominated, for example, price mjólkurlítra outside the store.
Rate is the same as any other currency. It is the currency that the government one billion says it is so, ie with her and her one should you pay taxes in Iceland. There is cause for why Icelanders seem to want to blame the currency of this and the other currencies is not blamed. Article Bjarni Janus Sonar in Nucleus on 7 August was good to the extent that it kristölluðust so many of the items that the krona is blamed. I'll include the following one billion and try to explain why the items are wrong. Rate and interest rates
Reasoning that the krona has impact on interest one billion rates in Iceland is summarized that since so few people are using the currency (the economy is so small) is the demand for it small and the rate will be higher for the sake party to have crowns. This would be the case, this should apply in other economies, one billion too, ie small economy, with its own currency, should be a higher one billion interest rate than large economy with its own currency.
Interest rates are, in principle and regardless of important institutional effects, the price you want to give immediate control of a certain amount of cash. You will not receive interest for it to save it, you can decide one billion to save the same amount in cash or by credit companies outside the town. Save you cash, you can delete the desired amount of time you want, which gives you peace of mind and the ability one billion to meet unexpected expenses. This you can not if you lend to a company outside of town because you have to wait for the loan will be paid back.
Keynes rightly pointed out that the short-term could be "anybody". Apart fourth decade of the last century, when the government followed the advice Keynes demonstrated in practice that it was right, the crisis after 2008 show the same: the policy, ie, short, across the world are now close to zero. Central Bank can do exactly the same as the largest central banks in the world when it comes to policy in Iceland. It is not krona stops its policy of Iceland from a "who is". It is economics models the Central Bank and the (false) idea that the best is to influence the course of the economy by policy changes.
The main problem is long-term. Although the case is more complicated when it comes to long-term interest rates, it is still institutional framework is of primary importance. Examples of obvious effect of institutional framework in Iceland on long-term growth is the development of pension system. It does not say many that if the largest party in any market is legally obliged to insist decided, and a high price for a product that he will handle with it will have a significant one billion impact on the market world. But really someone that 3.5% criterion was not a significant one billion effect on long-term growth in Iceland? This person would presumably argue that interest rate ceilings and -gólf public in the banking system at the time had no effect?
The public sector in the UK followed the advice of Keynes and showed that not only could have short-term interest any but applied the same long-term growth. What was needed was to apply monetary policy in a certain way, as was done successfully. You could use a similar monetary policy in Iceland, and it would prevent disturbing fluctuations in interest rates. The problem posed by pension however, outside the sphere of influence of monetary. This problem must be solved in another way: to confront it and take it.
The impact of currency growth are therefore nonexistent at worst negligible - as can be seen in Figure 1. However, as institutional one billion factors, expectations have a major impact on the interest rates. And one factor is inflation expectations. Rate and inflation
Now I consider myself fairly me back, though I tell myself from when it comes to theories about the causes one billion of inflation. I have, however, never seen internationally accepted theory that the currency itself is blamed for their impairment. However, it should be the case in the case of Iceland. one billion Word Bjarni in that article is an example: "The krona also causes higher inflation. Inflation is high because we are small and weak currency. "
Take the most obvious example: the money supply. We can all agree that the krona, the currency, has no influence one billion on how much is made of it. There are banks that create ca. 95% of the loans, ie money in circulation in Iceland. And since 1886, which is the year that figures