Iceland's Euro Bid Hinges On Greek Crisis Outcome, Central Banker Says

By Gabriele Parussini Of DOW JONES NEWSWIRES

-Gudmundsson says Greek crisis outcome to affect attractiveness of being a euro member

--Gudmundsson urges euro zone to improve its economic governance

--Gudmundsson says 'Markets are overpricing risk on Greece now'

AIX-EN-PROVENCE, France -(Dow Jones)- Policymakers in Reykjavik are closely watching the unfolding of the Greek debt crisis, for its outcome will be a key element of Iceland's decision to join the euro, the head of the country's central bank, Sedlabanki said, as he urged the currency bloc to improve its economic governance.

"The outcome of the Greek crisis will affect the attractiveness of being a member of the euro area," Mar Gudmundsson told Dow Jones Newswires in an interview here late Friday. "A monetary union needs much more economic integration, some elements of common economic and fiscal policy and a common financial stability framework. One needs to match an economic union with the monetary union for it to work," he added.

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