Towards North American Monetary Union?

Towards North American Monetary Union?: The Politics and History of Canada's Exchange Rate Regime

Copyright Date: 2006
Pages: 352
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  • Book Info
    Towards North American Monetary Union?
    Book Description:

    Helleiner finds little support in the U.S. for the concessions that would be necessary to make a North American monetary union palatable in Canada. Comparing the U.S. Federal Reserve and the European Monetary Union, he argues that the influence of Canada within a North American monetary union would be far less than that of individual countries within the European community. He also considers the seemingly paradoxical support of Quebec sovereignists for free trade and monetary union.

    eISBN: 978-0-7735-7569-1
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. List of Figures
    (pp. ix-x)
  4. Preface
    (pp. xi-2)
  5. Introduction
    (pp. 3-16)

    In 1999, an unusual and high profile debate broke out in Canadian politics. The issue suddenly being discussed was whether the country should join a monetary union with the United States. Although, since Confederation, Canadians had debated many aspects of their country’s economic relations with the US, this idea had never received serious attention. Even at the time of the introduction of the 1989 Canada–United States Free Trade Agreement (FTA), few had predicted that a monetary union with the US might soon follow.

    In fact, Canadian governments had not even been willing to fix the Canadian dollar to the...

    • CHAPTER ONE The Birth and Early Life of the Canadian Dollar
      (pp. 19-38)

      What are the political determinants of the Canadian exchange rate regime? The first half of this book addresses this question by analysing the historical evolution of Canada’s exchange rate regime from the midnineteenth century until 1985 when the Free Trade Agreement (FTA) negotiations began. The mid-nineteenth century is chosen as the starting point for this analysis because it marked the birth of the Canadian dollar. If we hope to understand the Canadian dollar’s future, it should be useful to examine why it was created in the first place. As this chapter shows, the answer turns out to be a rather...

    • CHAPTER TWO The Floating Rate of the Interwar Years
      (pp. 39-68)

      Since the time of its creation until 1914, the value of the Canadian dollar was firmly fixed to gold. In retrospect, this attachment to a fixed exchange rate represented an unusual era in Canadian history. Since 1914, there have only been three brief periods when Canada again embraced this exchange rate regime: 1926–31, 1939–50, and 1962–70. A floating exchange rate has been in place at all other times. What explains the long attachment of Canadian politicians to a floating exchange regime? This chapter begins to explore this question by examining the early years of the floating exchange...

    • CHAPTER THREE The Short-Lived Commitment to Bretton Woods
      (pp. 69-104)

      At the outbreak of World War Two, Canadian policy-makers abandoned the float of the 1930s and then played an important role in supporting the Bretton Woods negotiations which created a multilateral fixed exchange rate system for the postwar world. But their new commitment to a fixed exchange rate regime proved short-lived. In September 1950, Canada became the first country to reintroduce a floating exchange rate regime. Although the decision met severe criticism abroad, Canadian policy-makers did not back down and the country remained the only major Western country to contravene the Bretton Woods exchange rate rules throughout the 1950s.


    • CHAPTER FOUR From Fixed back to Floating Again: 1962–1985
      (pp. 105-134)

      Although Canada’s decision to float its exchange rate in 1950 was presented initially as only a temporary one, this exchange regime remained in place for twelve long years. In 1962, however, the country rejoined the Bretton Woods exchange rate regime. This chapter begins by highlighting how the decision to peg the Canadian currency to the US dollar did not reflect a long or careful reevaluation of the costs and benefits of a fixed exchange rate regime among Canadian policy-makers. Instead, it was taken in a very hurried fashion in response to a foreign exchange crisis and was designed primarily to...

    • CHAPTER FIVE The Exchange Rate Regime in the Free Trade Debate
      (pp. 137-157)

      The second half of this book examines the politics of the NAMU debate. NAMU supporters portray their proposal as a natural and obvious next step in the process of North American economic integration that began with the introduction of the Canada-US Free Trade Agreement (FTA) in 1989. They also highlight that interest in NAMU stems in part from a larger worldwide trend, prompted by the creation of the euro in Europe, towards the creation of regional monetary unions. From this perspective, the creation of NAMU is a very likely, if not inevitable, development. In this part of the book, however,...

    • CHAPTER SIX The Neoliberal Case for NAMU and Its Reception
      (pp. 158-184)

      In 1999, Canadians began to debate the issue of North American monetary union in a very active manner. Given that the issue had received almost no attention before in the country’s history, the sudden highprofile nature of the discussion was remarkable. The issue received extensive, often front-page, coverage in the country’s newspapers. It became the subject of one of the CBC’S weekly national phone-in programs. Canada’s leading magazine, Maclean’s, even ran a cover with a picture of George Washington in the middle of a Canadian coin and the headline “Say it ain’t so” in July 1999. The question of NAMU...

    • CHAPTER SEVEN US Politics and the Canadian NAMU Debate
      (pp. 185-212)

      As we saw in the last chapter, one of the most important arguments against NAMU has been that Canada would have little power in the governance of such a monetary union. Supporters of NAMU have tried to address this concern directly. Grubel has suggested that people should not underestimate the willingness of the US to endorse a new supranational North American currency and central bank in which Canada is granted a significant voice.¹ Even if NAMU were based on the US dollar, Courchene and Harris have suggested that Canada might still be able to secure considerable influence by negotiating a...

    • CHAPTER EIGHT Quebec Sovereigntists in the NAMU Debate
      (pp. 213-234)

      This analysis of Canada’s NAMU debate has not yet examined regional divisions. In the first half of the book, we saw how these divisions have been an important feature of the politics of Canadian exchange rate regimes since Confederation.¹ They also played a key role in the FTA debate in the 1980s. At that time, the FTA found strong support in Quebec, especially among sovereigntists, and in the commodity-exporting provinces of the country, while Ontarians were much more nervous about the potential consequences to their province’s industrial sector. Do we see a similar pattern of regional divisions in the NAMU...

  8. CONCLUSION: Canada and the Politics of Exchange Rate Regimes
    (pp. 235-252)

    Let us return to the question set out at the start of this book. Is the emergence of the NAMU debate a sign that Canada’s preference for a floating exchange rate is finally coming to an end? It should be clear from the analysis in the second half of the book that the free trade era and the creation of the euro hardly make NAMU inevitable. It is true that some of the political developments putting NAMU on the Canadian political agenda – such as support from neoliberals and some secessionist groups – are similar to those that promoted the fta and...

  9. List of Abbreviations
    (pp. 253-254)
  10. Notes
    (pp. 255-304)
  11. Bibliography
    (pp. 305-328)
  12. Index
    (pp. 329-333)