system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: How will Iceland simply adopting a different currency improve its economy?
gpt
I'll try and explain it simply but first you have to understand a bit of what having your own currency means.

Having your own currency means that your country has a central bank that tries to manage your economy, mainly by changing the interest rate. Changes in the interest affect the economy internally and externally. Internally, a lower interest rate means its cheaper for businesses to ask for loans so it helps the economy grow, a higher interest rate means its more difficult for costumers to ask for loans so they don't buy as many things which means low prices. Externally, a high interest rate means that foreigners want to own your countries financial assets as they can earn alot of money by doing so, a low interest rate means precisely the opposite.

This causes a big problem, a central bank has to try and manage the economy both internally and externally, a crisis occurs if it fails in any way. Many big countries don't have this problem, the US and the EU simply control the economy internally and as they are huge economies this doesn't really cause many problems. This isn't the case in Iceland, with a really small economy that is extremely dependant on the rest of the world it has a really tough time managing its own currency as it has to balance many different economic aspects. Iceland hopes that replacing its currency would help prevent this issues from happening again.