It may be in the throes of economic meltdown but Icelandic fashion is as cool as ice.

John Lennon once described Yoko Ono as ‘The world's most famous unknown artist: everyone knows her name, but no one knows what she actually does.' The same can be said of Iceland - one of the world's most famous unknown countries in which everyone knows its name but perhaps don't know where it is or what it has to offer. But, let me assure you, even the most faraway place can have some real-world creative spark. Move aside London, Milan, New York, Paris, and Tokyo - Iceland's Reykjavik is fast securing itself as the modern fashion capital of the world.

In early February, while attending Stockholm Fashion Week in Sweden, I decided to travel up to Iceland and see for myself what many in the industry are talking about - that unlike anywhere else in the world, Icelandic society has a uniquely strong orientation towards fashion. And they are right. Clothing, accessories, automobiles, housing and general personal appearance are all heavily influenced by the latest fashion trends. You can even see it in their music - Björk, Sigur Rós, Amiina, and Múm.

Unfortunately, just like the gods armed with a giant hairdryer, Iceland's financial crisis continues to cause a national meltdown, with the country poised to sink beneath the Arctic sea at any moment. However, there are surprisingly few visible signs of the desperate financial straits in which Iceland's 315,000 inhabitants find themselves. Designer fashion shops, bars and restaurants on Laugavegur, the main shopping street in downtown Reykjavik, continue to trade - as do the city centre's boutique hotels. And not all customers were tourists like me taking advantage of the devalued Icelandic krona.

But Laugavegur has become more than simply the place to be seen; it's now become the place to see what's ‘in' fashion, becoming the country's very own high-style catwalk. With Iceland experiencing a creative fashion boom, especially on Friday nights you'll find trendsetters strutting down the street exhibiting the latest in Icelandic haute couture. It's one of the most remarkable and highly innovative scenes to be seen. What's most remarkable about it is that, in general, Icelandic people simply dress as they please as the fashion diktat that you find in most other countries doesn't exist here. Instead, its cultural philosophy is seemingly a do-as-you-please attitude.

The diverse palette of the landscape and the many variations of texture to be seen in Icelandic nature provide fashion designers with endless inspiration, often working with tones and colours derived from the country's mountain landscapes, such as shades of purple, green, brown and grey, along with the whitest of glacier whites. Tulle trimmings are reminiscent of snow and glacial crevasses, while much of the latest trends use materials which look worn and distressed; they combine masculine garments with feminine cuts; and they design day and evening wear which can be mixed and matched endlessly. This inventiveness is what typifies the Icelandic fashion designer's inimitable sense of style and increasingly wide global appeal.

One designer that paraded a range of pieces down the Laugavegur was knitwear connoisseur Steinunn Sigurðardóttir (not be confused with the author of the same name). Offering handmade creations in electric shades of lava, ice, snow and sunsets tinged with an eerily chilly orange hue, Steinunn, who has previously worked at Calvin Klein, Tom Ford and La Perla showed a collection of high-necked wool dresses, sheer delicate blouses peeping out from slim black suits and jackets, boldly cut wool coats, and idiosyncratic shaggy cloche caps. We're all moulded by our environments, whether it's the pre-fabulousness of suburban Pennsylvania or Delaware (which are not as bad as you think) or 24 hours of daylight in the summer as can be the case in Iceland.

A vast amount of nature, geothermal hot springs and glacial palettes are present in Steinunn's every collection, but this time around she combined a sense of 1920s modernity, a Viking warrior and the hide of a beast simultaneously. While Steinunn has always been imaginative about structure, she treads that special place between Andrea Zittel's conceptual ‘uniform' projects in which made clothing all come from yarn as a discourse on continuity, and the school of Ralph Lauren and Gucci. It's all very chic and tipped to spread its influence across the fashion world.

Bella Beauty Magazine #18