Wondering how the Vikings are getting on in post-crisis Reykjavík? One recent February night, more than 50 Icelanders in bathing costumes and woollen hats dived into the bitterly cold sea at Ylstrondin Natuholsvik, one of Reykjavík’s public beaches. Many swam for several hundred metres, some all the way around the distant buoy bobbing on the icy water. They then ran the 200m back to the clubhouse and jumped into a 38C geothermally heated swimming pool, where they spent the next hour or so chatting. Pool rules: no talk about the economy.

This event was not a one-off. It’s one of the fastest growing activities in Reykjavík since the collapse. Lifeguard Isleifur Fredrikson says, “It used to be 10 people who would come and swim. But after the bankruptcy there are at least 350 every week.” Fredrikson thinks Icelanders have reconsidered their values. “Yes it’s cold – but then you survive.”

Arctic swimming is just one way people have gone back to their roots in the past year. Disillusionment with the banks has led to a return to old values. The fishing industry is back in vogue – as is knitting. The Islenski Barinn restaurant, opposite the parliament, changed its menu after the anti-government and anti-bank riots in January 2009. It now serves traditional Icelandic food including fermented shark, pickled onions, salted cod, horse tenderloin and grandma’s hot cocoa. The menu explains why: “The nation was changing. No one cared for the banks, everyone was nostalgic. There is something to be said about the old days.” Islenski Barinn is doing very well now, according to one of the owners.

At 67, the new prime minister, Jóhanna Sigurðardóttir, seems to offer a similar homey feeling. Straightforward and frank, she has provided the country with a degree of comfort and stability in a time of chaos. Jón Kaldal, editor in chief of Fréttabladid, Iceland’s biggest daily newspaper, says: “Icelanders trust her, and that is a big deal here.” But with the population of 320,000 aided by IMF emergency funds, unemployment at 9 per cent and rising, the krona at its lowest value in history and 5,000 people between ages of 24 and 29 leaving the country last year, is trust enough?

We meet the prime minister at her offices in Stjórnarráðið, an historic white house built in 1771 as a prison and home since 1819 to the Icelandic government. During the protests in the winter of 2008/2009, people gathered around the house and threw red paint at it (this was before she took up residence). Today it is gleaming white and we find Sigurðardóttir in her formal sitting room where she is dressed in a black trouser suit.

Sigurðardóttir has some key challenges ahead: she must secure the second portion of IMF funds, delayed because a deal to repay the debts of Icesave (the UK and Netherlands want their money back) has yet to be resolved. She must also attract foreign investment, determine how to use the natural resources of the country in a sustainable way, lead the nation out of a near-depression and turn around its tarnished image abroad.

She says, “The country is suffering and we have to conclude the Icesave issue. As it stands, nobody can win – we are spending a quarter of the state’s budget on interest. I would also like to see more development with green and solar energy and expand our use of green energy and renewable resources. And I very much see our future within the EU.”

So, what has changed since Monocle came here a year ago to check up on the health of the nation? The main shopping streets are bustling. Icelanders travel abroad less, but spend locally. Clubs are full every weekend and it seems like the hot tubs are full every night. But it’s still no fun being a banker in Iceland: a group called Skapofsi has continued to vandalise the homes of Iceland’s financiers.

But there is a new sense of creativity in the fresh northern air. Hi-tech entrepreneur Gudjon Mar Gudjonsson, has founded the Ministry of Ideas – a grassroots think tank funded by Iceland’s three universities. Firm Vatnavanir plans to use the network of thermal pools to promote the country as a wellness state.

And there are plenty of up and running post-crash success stories. Fresh-faced 37-year-old city councilman Gísli Marteinn heads up the environment and transport committee in Reykjavík and is working on plans to address Icelanders’ new transport priorities (in a poll shortly after the collapse 48.2 per cent of Icelanders said they would use the car less, and they seem to be sticking to that). “Before the collapse all the planning emphasis was on very expensive multi-level intersections, tunnels or whatever solution would make the car traffic run smoother,” Marteinn explains. “Now the city has reacted in a strong way, by making new bike lanes a priority, a better bus system (especially for students) and all major roadwork is on hold. This is a complete turnaround for Reykjavík.”

Private investment firm Audur Capital, which has an all-female board, launched at the exact moment the markets collapsed, and it is one of the few Icelandic financial companies to go through the meltdown and make a profit. Baldur Mar, one of a dozen men who work for Audur, manages two venture capital funds. One is focused on increasing wealth and purchasing power of women and the other is set up in association with the singer Björk, focusing on start-ups with a sustainability angle. “That fund is actually seeing a lot of interesting investment opportunities from people who lost their jobs and are now starting their own businesses,” he says. “I’ve seen more than 140 companies during the last 12 months.”

Wandering around a pier on the opposite side of town, we come across a modern design studio with the word “Vopnaburio” (“The Armoury”) over the front door. Owner Sruli Recht and his wife Meg Howard are part of a new design community setting up shop in this old fishpacking district. Recht designs, constructs and sells his accessory collection here. Along with photographers, a bike designer and some knitters, he moved to the pier to work in a large warehouse space that has very low rent. Now, some of the houses used by fishermen to keep their gear are being turned into stores. The Icelandic/Danish artist Olafur Eliasson’s gallery, i8, has opened a new space in a former cement factory nearby.

Recht believes the crisis has acted as a catalyst for Icelandic designers to form a tighter more supportive community. “Export is the way to get the country back on track, and designers are coming up with the innovative solutions to fix this crash,” he says.

That evening at a packed Kaffinbarren bar, we find Karl Sigurdarson, who we had met last year after he lost his job as a car salesman at Land Rover and Audi. He is glad he did not move to Dubai as planned and managed to find a job in tourism, a growing industry that has attracted many of his former colleagues. Sigurdson, who now makes a monthly salary almost comparable to his car-selling heyday, says, “We always knew that people wanted to come to Iceland. Even when it was two times the price it is now, there were still tourists. Now that it’s affordable, hopefully we’ll have more.”

Can there be a happy ending for Iceland? Its new identity remains a work in progress. But what has not changed is that it remains a uniquely talented, tight knit and family-oriented community, where everyone knows each other and where your reputation means something. Thorgeir Palsson, owner of the old-school Fiskefelagid restaurant, perhaps best sums up the mood: “Despite this crash, we are very happy. It’s still bad for many, but there is now balance.”