Currency Crisis

A currency crisis occurs when a nation’s fiat currency experiences a significant loss in value, leading to a financial crisis. This situation arises when investors lose confidence in holding the country’s assets. For example, Iceland faced a currency crisis during the global financial crisis when investors lost faith in the Icelandic financial sector, resulting in a 60% decline in the value of the Icelandic currency between the end of 2007 and the end of 2008.