The currency of the Faroe Islands is the Faroese króna, issued by the Danish National Bank. The Danish National Bank considers the Faroese króna to be a "special version" of the Danish krone and unique Faroese banknotes are in circulation on the Faroe Islands.
The Faroese currency is pegged to the Danish krone by the de jure Faroese currency board. Thus, the basis of the Faroese króna is an equal amount of Danish kroner deposited in an account in the Danish National Bank.
Although the banknotes used in the Faroe Islands are Faroese, the coins are the same as those in circulation in the remainder of the Danish Kingdom. Faroese and Danish banknotes are fungible in the Faroe Islands.
The Danish National Bank is the lender of last resort and all local Faroese accounts are denominated in Danish kroner.