[경제역사] Flexible VS Fixed exchange rate

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There are several reasons as to why, for the most part of Canada’s recent

economic history, a flexible, rather than a fixed exchange rate, has been used. The most

important purpose of utilizing a flexible exchange rate is to maintain the economic

independence that Canada has enjoyed for the vast majority of its economic history. To

switch to a fixed exchange rate would prove to be detrimental, for past experience

(namely the period between 1962 and 1970) of doing so has resulted in total

dependence on the United States’ monetary policy. In other words, Canada had no

monetary policy of its own and was simply using that of the United States’. One of the

most recent controversies concerning Canadian economics has been whether to fix our

currency to that of the United States’ (a system called “NAMU” - North American

Monetary Union), or to maintain a historically highly favored flexible exchange rate

regime. However, instating the NAMU system would lead to many problems,

especially the loss of Canadian economic freedom, independence, and power of

monetary policy. It is therefore in Canada’s best interest to maintain a policy of flexible

exchange rate.

Extensive Integration of Canadian and U.S. Economies

During recent years Canadians have become increasingly worried about the

prospect of being dominated, or at least unduly influenced by the United States. Our

proximity to the United States, coupled with our smaller size and openness, forced us to

confront many of the issues associated with globalization long before the term became

fashionable. The difficulties of maintaining a separate and truly distinct nation,

economy and culture of thirty million people while sharing a continent and three

thousand miles of border with a country ten times its population and twelve times its

economic activity seriously affect many aspects of Canadian life. Many Canadians feel

that their cultural life is heavily influenced by U.S. movies, books and television, and

are looking for ways to reduce this impact.

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