North American currency union
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Jump to: navigation, search
"Amero" redirects here. For the falsely convicted teacher, see Julie Amero.
The North American Currency Union is a theoretical economic and monetary union of two or three largest countries of North America, namely between Canada and the United States, but also possibly including Mexico.[1]
Map of a proposed NAU, with Canada, Mexico, and the United StatesImplementation would probably involve the three countries giving up their current currency units (U.S. dollar, Canadian dollar, and Mexican peso) and adopting a new one, created specifically for this purpose. The hypothetical currency for the union is most often referred to as the amero.[2][1] The concept is modeled on the common European Union currency (the euro), and it is argued to be a natural extension of the North American Free Trade Agreement (NAFTA) and the Security and Prosperity Partnership of North America (SPP).
Conspiracy theorists contend that the governments of the United States, Canada, and Mexico are already taking steps to implement such a currency, as part of a "North American Union (NAU)".[1] No current members of any country's government have officially stated a desire to create such a body, nor has anyone introduced a common currency as part of this concept.[3]
Contents [hide]
1 Basis and origin
2 Support
2.1 Canada
2.2 Mexico
2.3 Support in other regions
3 Criticisms and problems
3.1 Trade-offs
3.2 Differing economies
3.3 Political mandate
4 Amero coins
5 Amero bills
6 See also
7 References
8 External links
[edit] Basis and origin
The letter A inside a circle. The proposed symbol for the amero, originally chosen by Herb Grubel in "The Case for the Amero" [4]The idea for a North American currency union was first proposed in 1999 by Canadian economist Herbert G. Grubel.[1] A senior fellow of the conservative Fraser Institute think-tank, he published a book titled The Case for the Amero in September 1999,[2] the year that the euro became a virtual currency. Another Canadian think-tank, the C.D. Howe Institute, advocates the creation of a shared currency between Canada and the United States.[5]
After the report came out, center-left nationalist groups[citation needed] in Canada and America expressed their opposition to any currency union because they view it as an attempt by American businesses to gain access to Canada's extensive natural resources while dismantling the nation's social services.[1] The 100,000 member strong Council of Canadians, a progressive advocacy group, has declared one of its central issues to be the threat of "deep integration".[1]
Dr. Robert Pastor, in a 2001 book[6], suggested a common currency should be a foundation of "macro economic cooperation" among the three NAFTA countries. However, the 2005 Independent Task Force on North America, which he chaired, did not recommend a common currency, nor does Pastor in the section for additional and dissenting views suggest a common currency should be a goal. [1]
[edit] Support
NAFTA
[edit] Canada
One argument is that it would save up to $3 billion in currency transactions.[7] The same authors also stated that Canada's GDP could rise by up to 33 percent in a 20-year period given the adoption of a single currency.
The idea of a common currency has historically been unpopular in English speaking Canada, in comparison to the province of Quebec where it has received more support. A 2001 opinion poll found that in Quebec over 50 percent of respondents favored the idea of a shared currency, while in the rest of Canada a majority of respondents opposed the idea. [8]
[edit] Mexico
The possibility of a monetary merger has also been discussed in Mexico as a natural step to take after NAFTA.[9] Former Mexican president Vicente Fox echoed that view and expressed his hope for a greater integration of Canada, Mexico and the United States, including an eventual monetary union, while on a 2007 promotional tour for his book "Revolution of Hope."[10][11]
[edit] Support in other regions
Lower levels of currency cooperation have been practiced in the Americas before. Some nations such as Argentina, Brazil and Canada have at times tied their currency to the U.S. dollar. Some of them, such as Aruba, Bahamas, Barbados and The Netherlands Antilles (guilder) still do.
The U.S. dollar is officially accepted alongside local currencies in El Salvador (since 2001), Nicaragua, Peru, Honduras, and Panama, although in practice two of these countries (El Salvador and Panama) are fully dollarized. In 2000, Ecuador officially adopted the U.S. dollar as its sole currency.
Unofficially, the U.S. dollar is treated as a de facto secondary currency in much of Central America and the Caribbean along with parts of South-East Asia, specifically Vietnam.
Currency integration is also one of the many long-term aims of Unasur (Union of South American Nations), a supranational organization comprising all the sovereign nations of South America, modeled after the European Union.
[edit] Criticisms and problems
Opposition to a North American currency union exists high up in the governments on both sides of the Canada–United States border. Herbert Grubel, the first proponent of the amero, admits that American officials show no interest in the topic.[1] He concedes that "there wouldn't be very much benefit for the United States" in an amero.[1] Likewise, the Canadian Department of Finance strongly opposes the creation of a common currency with the United States, citing the loss of economic sovereignty. In briefing documents to Minister of Finance Jim Flaherty, finance officials concluded:
"A North American common currency would undoubtedly mean for Canada the adoption of the U.S. dollar and U.S. monetary policy. Canada would have to give up its control of domestic inflation and interest rates."[12]
[edit] Trade-offs
From the point of view of the Canadian and Mexican governments, a major obstacle to the creation of a unified currency is the sheer dominance of the United States in any such union. Unlike any country in the EU, the USA has a larger economy than the rest of its respective continent/union combined.[citation needed]
A paper from University of California, Santa Barbara puts forward the idea that the United States simply has too many advantages from the status quo to move toward a single currency.[13] The United States dollar already acts as a global currency, meaning any transition to a 'new' currency would risk compromising this position and could cause a shift toward the euro or yen. The U.S. dollar is currently being used in over half of all the world's exports, double the total United States foreign trade. The adoption of the amero could threaten the seigniorage that the U.S. currently gains from its dollar. While seignorage would still be gained from the amero, this would be shared among the Bank of Canada, the Federal Reserve, and the Banco de México. Therefore, even if the amero were used just as much as the U.S. dollar, the advantages would be shared among two or more countries, and not exclusively earned by the United States.
[edit] Differing economies
Several problems could arise in regards to macroeconomic management. By submitting to a common currency, the countries would lose considerable autonomy in the management of the currency itself, including the setting of interest rates. Amongst the three potential participants, there is considerable difference in policy which would have to be reconciled.
Debt is a factor affecting currency prices. As of 2008, the debt of the United States continues to increase, while the debt of the Canadian federal government is being reduced. [14] This is a clear advantage for Canadians and it would not be reflected if the currencies were to merge. The importance of commodities also factors into this equation.
A concern with any unified North American currency is the differing economic situations between each country. The Eurozone is broadly similar being service-based economies[15] based on high public spending (compared to the United States), high taxes and wealth being created by the sale of goods and services. North America on the other hand has three distinct economies; one based mainly on agriculture and manufacturing, with a demand for free trade (Mexico), another based on services such as retail, with low taxes and low public spending (United States), and a third based on services with higher taxes and higher public spending, with a large sector in primary goods such as oil, mining and lumber (Canada).[
From Wikipedia, the free encyclopedia
Jump to: navigation, search
"Amero" redirects here. For the falsely convicted teacher, see Julie Amero.
The North American Currency Union is a theoretical economic and monetary union of two or three largest countries of North America, namely between Canada and the United States, but also possibly including Mexico.[1]
Map of a proposed NAU, with Canada, Mexico, and the United StatesImplementation would probably involve the three countries giving up their current currency units (U.S. dollar, Canadian dollar, and Mexican peso) and adopting a new one, created specifically for this purpose. The hypothetical currency for the union is most often referred to as the amero.[2][1] The concept is modeled on the common European Union currency (the euro), and it is argued to be a natural extension of the North American Free Trade Agreement (NAFTA) and the Security and Prosperity Partnership of North America (SPP).
Conspiracy theorists contend that the governments of the United States, Canada, and Mexico are already taking steps to implement such a currency, as part of a "North American Union (NAU)".[1] No current members of any country's government have officially stated a desire to create such a body, nor has anyone introduced a common currency as part of this concept.[3]
Contents [hide]
1 Basis and origin
2 Support
2.1 Canada
2.2 Mexico
2.3 Support in other regions
3 Criticisms and problems
3.1 Trade-offs
3.2 Differing economies
3.3 Political mandate
4 Amero coins
5 Amero bills
6 See also
7 References
8 External links
[edit] Basis and origin
The letter A inside a circle. The proposed symbol for the amero, originally chosen by Herb Grubel in "The Case for the Amero" [4]The idea for a North American currency union was first proposed in 1999 by Canadian economist Herbert G. Grubel.[1] A senior fellow of the conservative Fraser Institute think-tank, he published a book titled The Case for the Amero in September 1999,[2] the year that the euro became a virtual currency. Another Canadian think-tank, the C.D. Howe Institute, advocates the creation of a shared currency between Canada and the United States.[5]
After the report came out, center-left nationalist groups[citation needed] in Canada and America expressed their opposition to any currency union because they view it as an attempt by American businesses to gain access to Canada's extensive natural resources while dismantling the nation's social services.[1] The 100,000 member strong Council of Canadians, a progressive advocacy group, has declared one of its central issues to be the threat of "deep integration".[1]
Dr. Robert Pastor, in a 2001 book[6], suggested a common currency should be a foundation of "macro economic cooperation" among the three NAFTA countries. However, the 2005 Independent Task Force on North America, which he chaired, did not recommend a common currency, nor does Pastor in the section for additional and dissenting views suggest a common currency should be a goal. [1]
[edit] Support
NAFTA
[edit] Canada
One argument is that it would save up to $3 billion in currency transactions.[7] The same authors also stated that Canada's GDP could rise by up to 33 percent in a 20-year period given the adoption of a single currency.
The idea of a common currency has historically been unpopular in English speaking Canada, in comparison to the province of Quebec where it has received more support. A 2001 opinion poll found that in Quebec over 50 percent of respondents favored the idea of a shared currency, while in the rest of Canada a majority of respondents opposed the idea. [8]
[edit] Mexico
The possibility of a monetary merger has also been discussed in Mexico as a natural step to take after NAFTA.[9] Former Mexican president Vicente Fox echoed that view and expressed his hope for a greater integration of Canada, Mexico and the United States, including an eventual monetary union, while on a 2007 promotional tour for his book "Revolution of Hope."[10][11]
[edit] Support in other regions
Lower levels of currency cooperation have been practiced in the Americas before. Some nations such as Argentina, Brazil and Canada have at times tied their currency to the U.S. dollar. Some of them, such as Aruba, Bahamas, Barbados and The Netherlands Antilles (guilder) still do.
The U.S. dollar is officially accepted alongside local currencies in El Salvador (since 2001), Nicaragua, Peru, Honduras, and Panama, although in practice two of these countries (El Salvador and Panama) are fully dollarized. In 2000, Ecuador officially adopted the U.S. dollar as its sole currency.
Unofficially, the U.S. dollar is treated as a de facto secondary currency in much of Central America and the Caribbean along with parts of South-East Asia, specifically Vietnam.
Currency integration is also one of the many long-term aims of Unasur (Union of South American Nations), a supranational organization comprising all the sovereign nations of South America, modeled after the European Union.
[edit] Criticisms and problems
Opposition to a North American currency union exists high up in the governments on both sides of the Canada–United States border. Herbert Grubel, the first proponent of the amero, admits that American officials show no interest in the topic.[1] He concedes that "there wouldn't be very much benefit for the United States" in an amero.[1] Likewise, the Canadian Department of Finance strongly opposes the creation of a common currency with the United States, citing the loss of economic sovereignty. In briefing documents to Minister of Finance Jim Flaherty, finance officials concluded:
"A North American common currency would undoubtedly mean for Canada the adoption of the U.S. dollar and U.S. monetary policy. Canada would have to give up its control of domestic inflation and interest rates."[12]
[edit] Trade-offs
From the point of view of the Canadian and Mexican governments, a major obstacle to the creation of a unified currency is the sheer dominance of the United States in any such union. Unlike any country in the EU, the USA has a larger economy than the rest of its respective continent/union combined.[citation needed]
A paper from University of California, Santa Barbara puts forward the idea that the United States simply has too many advantages from the status quo to move toward a single currency.[13] The United States dollar already acts as a global currency, meaning any transition to a 'new' currency would risk compromising this position and could cause a shift toward the euro or yen. The U.S. dollar is currently being used in over half of all the world's exports, double the total United States foreign trade. The adoption of the amero could threaten the seigniorage that the U.S. currently gains from its dollar. While seignorage would still be gained from the amero, this would be shared among the Bank of Canada, the Federal Reserve, and the Banco de México. Therefore, even if the amero were used just as much as the U.S. dollar, the advantages would be shared among two or more countries, and not exclusively earned by the United States.
[edit] Differing economies
Several problems could arise in regards to macroeconomic management. By submitting to a common currency, the countries would lose considerable autonomy in the management of the currency itself, including the setting of interest rates. Amongst the three potential participants, there is considerable difference in policy which would have to be reconciled.
Debt is a factor affecting currency prices. As of 2008, the debt of the United States continues to increase, while the debt of the Canadian federal government is being reduced. [14] This is a clear advantage for Canadians and it would not be reflected if the currencies were to merge. The importance of commodities also factors into this equation.
A concern with any unified North American currency is the differing economic situations between each country. The Eurozone is broadly similar being service-based economies[15] based on high public spending (compared to the United States), high taxes and wealth being created by the sale of goods and services. North America on the other hand has three distinct economies; one based mainly on agriculture and manufacturing, with a demand for free trade (Mexico), another based on services such as retail, with low taxes and low public spending (United States), and a third based on services with higher taxes and higher public spending, with a large sector in primary goods such as oil, mining and lumber (Canada).[
