Wednesday, September 26, 2007

Has parity killed monetary union?

..."With the loonie and greenback now equal, will a monetary union soon follow? Common currency enthusiasts may hope so, but the political prospects for a single money in North America are in fact dimmer than ever. Parity brings the two countries' currencies closer together, but a monetary marriage is not on the horizon."...
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morrisonbonpasse said...

Merging currencies into a monetary union would be easier at parity, but creating a monetary union is a long political process and its conclusion cannot be timed to fit the currency markets. The date for conversion needs to be set far in advance at a specified currency exchange rate so all the necessary calculations can be made.
Currency fluctuations such as we see between the U.S. and Europe and among all countries or monetary unions around the world are wasteful, risky, and unnecessary.
What is needed is a Single Global Currency, managed by a Global Central Bank within a Global Monetary Union. (See www.singleglobalcurrency.org) If the euro can be used successfully by 13 nations, soon to be 15, and later 22 nations, why not move to a currency to be used by all 191 members of the United Nations for international transactions AND for internal transactions such as the payment of taxes.
Canada's major problem with a North American Monetary Union is similar to New Zealand's problem with monetary union with Australia in that the smaller country does not wish to be swallowed by the larger country. One way to make the North American merger more acceptable will be for the U.S. Federal Reserve to give Canada a fair number of seats at the monetary policy decisionmaking tables. The Federal Reserve is not likely to provide such incentives until it believes them necessary to shore up the U.S. dollar in its competition with the euro.
The better step for Canada is to support the world's move to a Single Global Currency, without joining a regional North American Monetary Union. Such leadership would be consistent with Canada's long tradition of forward-looking international policies.
The implementation of a Single Global Currency will save the world approximately $400 billion in foreign exchange transaction costs, and will eliminate currency crises and balance of payment problems and eliminate all the currency fluctuations which bedevil our globalizing world.
The goal of the Single Global Currency Assn. is a Single Global Currency by the year 2024, only 17 years away. Daunting as that goal may seem, remember that in 1985, when the euro was still 17 years away from the pockets of Europeans, the prospects for ever abandoning the deutschmark, franc and guilder seemed remote, too. Also, the Berlin wall was still standing and the Soviet Union loomed large.

Sincerely,

Morrison Bonpasse
President
Single Global Currency Association
P.O. Box 390
Newcastle, ME 04553 USA
1-207-586-6078
www.singleglobalcurrency.org

September 28, 2007 at 5:23 AM

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