Iceland plans to lift all remaining capital controls that have been in place since the Nordic country's biggest banks collapsed after the global financial crisis in 2008. The crown slumped to the biggest one-day loss in eight years on Monday.
"The removal of the capital controls, which stabilized the currency and economy during the country's unprecedented financial crash, represents the completion of Iceland's return to international financial markets," Iceland's finance ministry said in a statement.
Iceland said on Sunday capital controls, such as those which restrict money flowing in and out of the country, would be lifted from Tuesday.
The decision represents the end of an eight-year battle for Iceland to repair its financial system after a banking collapse caused its worst recession in over six decades.
"This move is the critical first step in the new Government's strategy for the country's financial future, and we can now look ahead with a healthier, stronger and more diversified economy," Benedikt Jóhannesson, Iceland's minister of finance and economic affairs, said.
"For the past year, the Government and Central Bank of Iceland have been lifting these controls through an incremental, measured process that focused on protecting the currency, addressing a balance of payments problem and tempering shocks to the Icelandic economy," Jóhannesson added.
Despite the government's efforts to protect the Icelandic crown, the currency fell by around 3 percent against both the euro and the dollar on Monday as traders feared the move could trigger outflows of pent-up foreign and domestic cash.
Since the nation's financial meltdown, Iceland's economic recovery has been bolstered by a tourism boom. In 2016, approximately 1.8 million people visited the volcanic island, according to the Icelandic Tourist Board, which represented a 40 percent uptick from the year previous.
Iceland's economic growth rate surged in the last calendar year as a combination of household spending, investment and the nation becoming a prime location for tourist's boosted gross domestic product (GDP) by 7.2 percent.
The country's currency has rocketed up 18 percent against the euro over the past year as traders eyed Iceland's relatively high interest rates.