The Lutheran Cathedral in Reykjavik, Iceland. Reykjavik (smoky bay) is the capitol of Iceland and has a population of about 200,000. The overall population of Iceland is about 325,000; mostly people of Scandinavian stock who came from Norway and Denmark in the 9th and 10th centuries. Lutheranism is the state religion of Iceland. The statue in front of the Cathedral is Leaf Ericson (the founder of Iceland).