A North American Monetary Union

Paper Summary:

A single currency in NAFTA has been an issue that has become more frequent today in North America. In determining whether this is a good decision or not it is important to review the pros and cons of having a single currency. This paper analyzes what might be the impact if the nations of the North American Free Trade Agreement were to launch a monetary union policy. The paper also discusses the advantages and disadvantages for each nation and its impact on the economy. Graphs are provided where relevant.

From the Paper:

"Some of the Canadian politicians like Courchene and Harris have argued that if Canada creates a monetary union with the United States it would "reduce transaction costs, that is how much it costs to make a certain trade in terms of time. These costs are incurred because of border-related paperwork and the use of two currencies that fluctuate in value against each other. A monetary union would relieve companies of these costs, reduce the paperwork and offer a more stable macro-economic environment allowing for more accurate calculation of profit margins." According to the above statements and research it is apparent that a single currency would be beneficial to MNEs in NAFTA in many different ways especially in terms of financial costs."

Sample of Sources Used:

• About: The Canadian Exchange Rate. 2005. (http://economics.about.com/cs/money/a/cadexchange_2.htm). November 10, 2005.
• Chriszt, M. (2004). Perspectives on a Potential North American Monetary Union: Economic Review. Federal Reserve Bank of Atlanta. P29.
• Citizenship. (http://www.standards.dfes.gov.uk/pdf/secondaryschemes/ks4cit11.pdf#search='disadvantages%20of%20a%20single%20currency'). November 15, 2005.
• Economic and Financial Affairs. (2004). (http://europa.eu.int/comm/economy_finance/euro/origins/origins_1_en.htm). November 14, 2005).
• European Parliament. (2004). (http://www.europarl.eu.int/parliament.do?language=EN). November 12, 2005.

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