The historical legend associated with Denmark's influence on the Icelandic flag is tied to the legend of the Dannebrog, Denmark's national flag. According to tradition, the Danish flag, the Dannebrog, miraculously fell from the heavens during the Battle of Lyndanisse (modern-day Tallinn, Estonia) in 1219, ensuring the victory of King Valdemar II of Denmark. This divine origin story lent the Dannebrog a powerful historical and symbolic significance.
This legend influenced several Nordic countries, including Iceland, whose flag design features a Nordic cross. The Icelandic flag, adopted when Iceland gained independence from Denmark in 1944, uses the familiar Nordic cross pattern as a nod to its historical ties with Denmark and the other Scandinavian countries that share this design element. The cross design represents Christianity and the shared cultural and historical heritage of the Nordic countries.
For more information, you can check the Guide to Iceland's article on the Icelandic flag here.
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