Euro not "fail-proof" formula for success: Iceland

ABU DHABI (Reuters) - Euro zone membership is not a “fail-proof” formula for economic success and the benefits for Iceland look less clear in the wake of the current debt crisis, Iceland’s president told Reuters on Wednesday.

“The debate more than a year ago to apply for membership was that the global financial markets have developed in such a way that it was difficult to maintain a separate currency for a small nation,” President Olafur Grimsson said in an interview with Reuters.

“But since then we have seen one euro country after another in serious difficulty. Most recently, what’s happening in Ireland. So the advantages of having a different currency look less clear now,” he said.

The island of 320,000 people applied to join the European Union over a year ago after its top banks collapsed under a weight of debt, sending its economy into a tailspin.

The crisis persuaded the country to seek safety net of membership after decades of reluctance but Grimsson appeared skeptical about the safety the European Union could provide.

“The euro is not a fail-proof formula for economic success as Greece and Ireland and other countries are now experiencing,” he said. (Reporting by Humeyra Pamuk, Editing by Jon Boyle)