A North American Monetary Union

Paper Summary:

This paper examines how the subsequent launch of the Euro and the move toward dollarization has prompted debate as to Canada's potential involvement in such a union with the United States. It attempts to prove how under a common currency, the costs to Canada would prevail over the benefits and such a step would be detrimental to aspects of Canadian economics, society, politics and culture.

From the Paper:

"It is an advantage for Canada to have control over its monetary policy for several reasons. By increasing the money supply, the Bank of Canada can lower interest rates, which lowers the exchange rate. As mentioned above, flexible exchange rates adjust to falling export prices and in so doing, reduce unemployment. Even if the Bank of Canada does, for the most part, tend to follow suit with the Federal Reserve Bank's interest rate decisions; it is doing so by choice because it is deemed that this is in Canada's best interest. It is comforting to know that when extenuating circumstances arise, decisions on monetary policy ultimately rest with the Bank of Canada, which is primarily concerned with the wellbeing of Canada."

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