(May 24 – 17:45 ET) – A North American common currency is not an option for Canada, according to a C.D. Howe Institute Commentary. Even if Canadians thought they would do well under such an arrangement, political and institutional roadblocks will keep a common currency off the table.
The study Leaving Well Enough Alone: Canada’s Monetary Order in a Changing International Environment was writted by David Laidler and Finn Poschmann.
Laidler and Poschmann explain that the only realistic common currency option available to Canada is the U.S. dollar. Adopting the U.S. dollar would impose onerous costs on Canada. And it would end the Bank of Canada’s ability to pursue monetary policy suitable for the Canadian economy. The study’s author’s conclude that Canada needs to maintain a flexible exchange rate.