Currency and National Identity

[DingBat]

This is something that members from EU nations can definitely contribute to:

Lately, there has been some debate in Canada about adopting the U.S. dollar. Assuming the Americans agree, what are the implications?

Does national identity depend on an independent currency? The EU example would tend to say no.

Does a country give up control of it's economy when it gives up control of it's currency? Perhaps EU citizens can answer this.

Does adopting the U.S. dollar inevitably mean integration?

Comments welcome,
/bruce

 

[Magnus]

Well, last time I was in Canada, you got a $1.50 Canadian for every $1.00 American, so this would have to be adressed!

I do like the Canadian currency though, the Looneys ($1) and the Tunes ($2) coins are fun.

 

[MCdread]

Does national identity depend on an independent currency?
Well, most countries have drawn national symbols in their coins and bills. It is a good way to feed the national identity and spread the myths, events and the personalities that forged the history of a country. In that sense, yes, an independent currency helps to sustain the idea that every person bearing a coin with the symbols of a community is a member of it. But, the inverse, ie, the question you asked is not true. One does not need to pay his things with coins and bills carrying the ensigns of the country one regards as his own, to feel a part of it. In many parts of the world you have or had numerous examples of nations that were part of some state that comprehended many other different national identities, all using the same currency, and that national identity never disappeared. National identities depend on many things and a currency of its own is not an indispensible condition to sustain that identity.

Does a country give up control of it's economy when it gives up control of it's currency?
In the case of Europe that is true at some extent. It's logical that when you have 12 countries that abandoned their national currencies to adopt a common one, the decisions concerning the monetary policy will have to be shared. And offcourse, this policy naturally affects the economy. The funny thing is that most countries gave up their monetary independence with so little dificulty, because they thought that it was, in fact, the only way to gain again some control of it. Before the Euro, all the euroland countries would have to follow what the Bundesbank was doing. France, for example, accepted this in order to have a word to say, instead of being completelly dependent on the decisions that were coming from Frankfurt. Now, they still come from Frankfurt, but the bankers from all the Euroland can take part on it. In exchange, France supported the full political independence of Germany.
Now, the big fight inside the ECB (European Central Bank) is about what type of guardianship it should follow. If it should be ruled by the central bankers and completelly independent of the political power (Wim Duisenberg is within this line). Or if, as the french want, it should remain more attentive on the political signs (like the Federal Reserve).

 

[allhailIndia]

Hmm, I really don't think it is worth getting rid of a nation's currency unless there is either a desire to unify with another country (EU) or there is severe financial crisis(Argentina).
Since Canada does not seem to be facing either problem, I don't see why the Canadian Dollar should be abandoned

 

[Jimcat]

To the people looking for a good reason why Canada shouldn't give up its own currency, I give you one simple example: Argentina.

Argentina didn't adopt the US dollar as its currency, but it did the next best thing: pegged its peso to the US dollar. In practical terms, this meant that Argentina couldn't legally print a peso unless they had a dollar to back it up. The problem with this is, you need a constant source of dollars if you want to have a growing economy. The scheme worked well enough when Argentina's exports were strong. But when the world economy slowed down and other countries bought less from Argentina, their dollar supply dried up, so their money supply was restricted. This sent interest rates through the roof, and also impaired their ability to repay loans. Thus, the collapse of the economy and of the government, and the abandonment of the dollar peg.

Canada might fare a little better with a US-dollar based currency. Canada is the closest neighbor and biggest trading partner of the US, so they have a much more reliable supply of dollars. But still, by relying on trade with the US for their money supply, they would be exposing themselves even more than they already are to a "contagion effect" if the US economy has problems.

Essentially, by adopting another country's currency as your own, you are surrendering (or at least severely limiting) your financial sovereignty. Canada's financial policy would be dictated in New York and Washington rather than Toronto and Montreal. Even as an American, I don't think that adopting the US currency would be good for Canada.

Canada already has a strong source of US dollars from exports and tourism. The weak Canadian dollar actually helps to bring in American dollars, by making Canadian goods more of a bargain. If it ain't broke, why fix it?

 

[knowltok2]

Besides, why do you wan't to take away the satisfaction I get when I slip a Canadian quarter or two into a wrap of coins for the bank?

(No, I'm not doing this on any systematic basis as some sort of scam, I am merely passing along what has been passed to me. Geez, I thought it might be funny, okay?!? )

((Gotta stop listening to the voices.))

 

[Sodak]

Originally posted by DingBat
Does adopting the U.S. dollar inevitably mean integration?

You will be assimilated. Resistence is futile.

Not if it's set up as an agreement that can be cancelled. If a way out is part of the organization of the currency adoption, there should not be any concern. Regardless, it sounds like a risky, unnecessary thing to do, really.

Unless the Canadian leadership is not telling all they know... were any of them former Enron execs?

 

[Richard III]

The US doesn't need to let us use their dollar: look at what Ecuador did, they just "dollarized" on their own initiative.

That said, I think Canada should keep its dollar anyway, not for any sentimental reasons, but because more diverse currencies (within reason) are better in that they offer more flexibility to central bankers to adjust for local economic conditions. The Canadian economy is doing so well in part because our low dollar effectively subsidizes our export-based manufacturers.

We should also keep our dollar because it means we Canucks get to listen to David Dodge (our central banker) and his really weird voice on TV. He's an SOB, but he's our SOB.

R.III

 

[knowltok2]

Originally posted by Richard III
The US doesn't need to let us use their dollar: look at what Ecuador did, they just "dollarized" on their own initiative.

R.III

Good plan, all those Americans who are so ignorant of our northern neighbors can just equate Canada with Ecuador.

Potential statement: "Canada, Ecuador, what's the difference? I know ones cold, and one's hot, but besides that?"


Sorry all, just a funny notion that popped into my head. Ignore it, this thread seems to having a weird effect on me. That, or that strange tea I drank about an hour ago....

 

[Richard III]

Originally posted by knowltok2
Good plan, all those Americans who are so ignorant of our northern neighbors can just equate Canada with Ecuador

Um, they already do.

R.III

 

[muppet]

I love a good clean sense of humor.

Are there not already discussions underway between Canada, USA, and Mexico regarding an amalgamation of North American currencies by 2010? Something silly sounding like the Amero. If you asked me, 'The Amero' sounds more like an airplane than a currency. Or was this just a myth?

Is the amalgamation of multiple currencies similar to exchange rate pegging? Hong Kong, for instance, pegs its currrency to the US dollar.

Other than transparency (of prices) and reduced economic friction (removal of exchange rate commissions at banks etc.), what other benefits, or downsides are there?

Given the EU has not yet resolved all the difficulties of such an endeavor, shouldn't North America wait to see how Europe eventually settles everything?

 

[knowltok2]

Amero? Surely this a sick and twisted vision spawned by nefarious agents of the dark one himself!

I could live with Canada using the same currency as the US, but Mexico has gone through too many colapses in recent history to make me comfortable with having the same currency, if we aren't confident of their economic policies and stability? I don't want economic mismanagement in Mexico to affect me and my economy any more than it already does. This sounds isolationist, and that is not how I am, but there is a lot more to sharing a currency than just reduction in friction and making prices transparent.

The Europeans have taken a bold step. If it works they will reap the benefits of it together, but if one region goes into a decline, they will all suffer together as well. That's all well and good if it is market forces at work, but mismanagement and corruption are different matters entirely. People in Germany are not going to be happy if their economy is hurt because Italians don't have the controls and sageguards in place that Germans would consider essential.

As far as naming any currency the Amero, that is a load of three day old donkey manure. Canada calls theirs a dollar, the US uses the dollar, and half the Mexican economy uses it too. Our economy is bigger, we won nyah nyah nyah!!! Besides, there are more of us than them, lets put it to a vote!

 

[Richard III]

Originally posted by muppet
Are there not already discussions underway between Canada, USA, and Mexico regarding an amalgamation of North American currencies by 2010? Something silly sounding like the Amero. If you asked me, 'The Amero' sounds more like an airplane than a currency. Or was this just a myth?

Yes and no. There has been a group of economists agitating for this, and their proposed currency name is the "amero." Which may explain why they're not getting too much support!

R.III

 

[polymath]

"Amero? Surely this a sick and twisted vision spawned by nefarious agents of the dark one himself!"
You don't mean.....Simon Darkshade?!?!?

All I can say, from a Brit point of view, an Englishman's pound is his castle.
Is Eire on the euro now? Logically they should be but I have no idea.

 

[Jimcat]

Yes, Eire is on the Euro. They had prices marked in punts and Euros when I was there last year. Now my left-over five-punt note just makes a nice souvenir.

 

[knowltok2]

Originally posted by polymath
"Amero? Surely this a sick and twisted vision spawned by nefarious agents of the dark one himself!"
You don't mean.....Simon Darkshade?!?!?

I don't think even he is capable of such a vile notion. He may be able to concieve of conquering humanity and ruling as an opressive tyrant with a vast array of sinister henchmen (I've got my job title already, get yours before all the good ones go), but replacing the U.S. dollar with something called an Amero? What kind of sick, depraved, psychopathic lunatic do you think he is?!?

With notions like that, you are not likely to rise much beyond Undersecretary for the Subminister of the Department of Aardvark Research, itself a minor branch of the Programs to be Cancelled and their Officials Flogged Ministry.

Good God man, watch what you say!

 

[allhailIndia]

Naah, no other word can epitomize the greed and superficiality of American life and plain envy of other nations like the US dollar.

As for the Amero, it is simply nauseating