As time goes by, we will have to consider our options. A review of our future exchange rate policy will be particularly important. The possibility of Iceland at some stage joining a larger currency area should not be precluded, particularly if the political and economic cost of staying outside will be found to outweigh any advantage of maintaining an own currency. BIS Review 117/1999  4  Iceland and America Looking briefly in another direction, Iceland’s relations with the great continent in the West date back a thousand years. In recent decades, we have had important trade links with the United States. However, the relative share of trade with the US has declined significantly, or below 15%, since exports to the US peaked at almost 30% of total exports in the 1970s. Imports from the US also declined significantly from a high level around the middle of the century to around 10% of total imports in the most recent years. The number of American tourists has also declined in relative terms. Although the share of the US in Icelandic merchandise trade and tourism has declined, the US dollar still plays a significant role as a vehicle currency in Icelandic trade and foreign exchange transactions. Recent changes in the geographical pattern of trade and investment reflect the liberalisation of trade within Europe and the increasing globalisation of the world economy. Like other developed countries, Iceland has a most favoured nations agreement with the US and Canada.
Mr Gunnarsson touches on a number of topics including developments in the Icelandic economy, the financial system and financial supervision  Presentation by Mr Birgir Ísleifur Gunnarsson, Governor and Chairman of the Board of Governors of the Central Bank of Iceland, to the Iceland Finance Forum held in Íslandsbanki HF on 22 October 1999. *  *  *  Mr Chairman, Ladies and Gentlemen, I am honoured to have the opportunity to address such a distinguished gathering of financial professionals and I congratulate Íslandsbanki for having brought you all together in Reykjavík. In my talk today I will touch on developments in our economy, developments in the financial system, the monetary policy of the Central Bank of Iceland, financial supervision and the implications of developments in Europe. Economic developments A strong upswing has characterised the Icelandic economy in recent years. We are now in the fourth year of more than 5% real growth of the economy. In the early phase of the upswing, growth was driven to an important extent by a strong recovery in foreign direct investment in Iceland, particularly in the so-called power intensive industries. Later on, rising domestic consumption became the driving force of economic growth. From the early part of the decade, inflation was very low. For a number of years it was in fact consistently lower than the average for the OECD countries.