This Icelandic Royal Standard was established by Royal Resolution No. 23 of 5 July 1921, after Iceland became a separate kingdom in 1918.

Failed republic of Iceland
Iceland is bankrupt. Time to reconsider the hasty step to proclaim a republic. Iceland became independent from the Kingdom of Denmark in 1918, but remained a Monarchy and shared the same Monarch with Denmark: King Christian X, just as The United Kingdom and Australia share a Monarch – Queen Elizabeth II – or as Austria and Hungary has shared a Monarch since 1867. The Austrian Emperor Franz Joseph was also King Franz Joseph of Hungary.

During the US occupation Iceland was declared a republic on 17th June 1944. Today the Icelandic Krona's free fall on the international currency markets is surpassed only by the catastrophic failure of Zimbabwean currency. One of the country's three banks, Glitnir, has been nationalised; another wants money from its customers. Foreign currency is running out as international banks refuse pleas to lend money.

The Icelandic people will see a drop in their standard of living and the country will return to fishing rather than financial services. Iceland's near financial meltdown has been seen as the biggest yet faced by any country over its financial sovereignty in the 14-month-old credit crisis.

On 5th October the prime minister Geir Haarde made an emotional address to the nation. “There is a very real danger, fellow citizens, that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy. No responsible government takes risks with the future of its people, even when the banking system itself is at stake. The Icelandic nation and its future takes precedence over all other interests.

"If there was ever a time when the Icelandic nation needed to stand together and show fortitude in the face of adversity, then this is the moment. I urge you all to guard that which is most important in the life of everyone of us, protect those values which will survive the storm now beginning. I urge families to discuss together and not to allow anxiety to get the upper hand even tough the outlook is grim for many. We need to explain to our children that the world is not on the edge of a precipice and we all need to find an inner courage to look to the future."

He should have revoked the 1944 proclamation of the republic and asked Queen Margrethe II of Denmark to become Queen of Iceland. British actor John Cleese had formulated a similar Notice of Revocation of Independence in his famous Letter to America (“To the citizens of the United States of America, in the light of your failure to elect a competent President of the USA and thus to govern yourselves, we hereby give notice of the revocation of your independence, effective today. …")