Reykjavik history

Legend has it that the world's most northerly capital was founded by a Viking called Ingólfur Arnarson, who named the place Reykjavik (Smokey Bay) after the steam rising from the hot springs. Today, these numerous geothermal springs provide almost all the heating and water in the city.

From only a handful of farmhouses until the middle of the 18th century, when a small trading community began to grow, Reykjavik gradually developed as an urban centre. By the end of WW2, Iceland gained full autonomy from Denmark and Reykjavik became Iceland's capital city.

Although it still feels like a provincial town, with its low buildings and brightly painted houses, Greater Reykjavik is home to three out of five Icelanders and the diminutive city dominates Iceland politically, socially, economically and culturally.

Since Reagan and Gorbachev played out the end game of the Cold War in Reykjavik in 1986, the city has emerged as an unlikely tourist destination. International music acts such as Bjork and Sigur Ros have helped create a fashionable image for the city, and many young people head there, especially for the music festivals.

The economic crises of 2009 and 2010 hit the local economy hard. On the plus side for visitors, it did make things slightly more affordable, and the locals are such a hardy lot that the city will no doubt emerge stronger than ever.