The European Commission has opened talks with Iceland regarding the country’s potential EU membership.

A European Commission (EC) report has deemed Iceland as ready to begin talks regarding joining the EU, although for that to take effect a number of the country’s current laws will have to be adapted.

The report was issued just seven months after Iceland applied for membership. If the 27 existing EU member states accept the island as an official candidate, negotiations are likely to last one year, and then will be closely followed by a referendum within the country.

While Iceland already shares many EU values, such as its human rights policies and democratic operations, the report stated that the country will have to “make serious efforts” regarding some of its fishing, agriculture and financial services laws.

It is the financial service operation of the country that are of most concern to the EU. In 2008, Iceland’s online bank Icesave collapsed and the country is still involved in disputes with Britain and the Netherlands over compensation claims.

Still deep in economic recession, the country has also experienced the devaluation of its currency, the Krona. Speaking to the Financial Times, Iceland’s Foreign Minister Ossur Skarphedinsson, said: “What really matters to us is the possibility to join the euro. One of the bitterest experiences from the crisis is the difficulty for a small nation like ourselves… to maintain a micro currency.”

The North Atlantic island has a population of 320,000, two thirds of whom live in the country’s capital Reykjavic. According to the EC, Iceland not only has the highest literacy rate in the world, but also generates more renewable energy than any other country.

Other countries waiting to join the EU are Turkey, Croatia, and the former Yugoslav Republic of Macedonia.