While Canadian dollars and US dollars isn't always close to each other, it is still close currencies in my opinion. After all, Canada is not that far of United States, they have contracts and exchanges with United States, it's the same language and there's some cultural shares between them. Not so surprising. Still, Canada still kept their own dollars, while some countries not so close of United States are already under the USD currency. So, what are the benefits of Canada of this currency? What are they trying to do with it right now, in 2015? Also, with USD who got stronger, CAD/USD currency got a tremendous value difference that never happened in the past 10 years. What's the effect of this stronger US dollar?
I think it's a matter of autonomy. Canada is a huge country, so what advantage would they have in using US dollars? They are an independent country...
Well, maybe they seem independent and all goods made in Canada that are not brought using US dollars isn't concerned, but in reality, how much goods Canada produces? How much they export? And doesn't they more generally use US dollars in commercial exchanges than Canadian ones? That's the relevant set of questions, in my opinion. Because, sure, you have a dependency when using the currency of another country. But you also have a big advantage: exports/imports with all countries with the same currency gets easier, both for people and for companies. While Euro may have done harm here and there, it also helped a lot Europeans exchanges to happen. It's a whole hassle to handle the spikes of currencies. Don't forget Canada only have a population of 30 million people, no more.
I live on an American border town to Canada and I think your observation is half right. I also am not to sure what your question is getting at, but for what it is worth here is what it is like if you live on a border and depend on another countries income or outflow. Canadian shoppers have been a god send to our community, if you go to our mall on the weekends or over a holiday (Canadian or American) the mall is filled with shoppers that want to take an advantage of the price savings due to less tax. GST in Canada is very high. Money is usually accepted at par in the area that is closest to the border, as you push into Canada or the States you have to get an exchange which is still not a bad deal for Canadians. Today the Canadian dollar is worth 75 cents US, but I can tell you as fact if I drove to Toronto today, I would see little if no savings on exchange for my American money, it would be gobbled in GST and fee's. It works in border towns like ours because there are so many cultural events that make people from both sides want to travel. Tourism is great when you have a regular steady flow of people that will come to events like Hockey and conventions. I like Canada for the music festivals. All the surrounding businesses benefit, hotels, restaurants, gas stations and stores. As far as imports and exports this (Canada and WNY) a major hub for beer manufacturing, maple syrup and apples. A fair amount of produce is shared between the regions, we are known for our growing wine country in the Niagara region. In recent years we have seen a huge growth in the film industry with film crews taking advantage of both regions for shots. Recently they did the new Ninja Turtle movie here. Will there ever become a day when this portion of New York and Ontario combine? I think that could be possible, culturally we already are, but from a financial standpoint it is probably better if it remained like it is. The push/pull of economics is what keeps the trade alive.
Well, firstly, thanks for your in-depth answer! I always look closely on feedback from people who knows the situation because they're inside. My question and my point is that, I find weird to talk about independence when you're dependent. Take a simple example. You take Skype to communicate instead of Facebook messenger in order to be "independent" from Facebook. But, all your contacts are Facebook contacts. Where's the independence? This is how I see the Canadian dollar. For a money, to exist and be useful, you must have good or lots of people owning money in the currency. Canada doesn't have much luck, I don't think they have many goods, and they have even less people. Otherwise, what are you doing? At each time you import or export, you can't use your own currency, but probably another one. So you make your exchanges harder because a currency change means a currency charge from your bank, risks of rate changing and so on. If the exchange with US was easier by using USD, I feel like they would do more exchanges between these two countries without really caring about it comes from Canada or US.
Canada is one of the few countries with a GDP over 1 trillion. Canada may only have 30 million people but we have a very advanced economy and huge reserves of natural resources. We have our own currency because we want to maintain control of our monetary policy. The last governor of the Bank of Canada (Our central bank, or our version of the "Fed") was Mark Carney, one of the best central bankers in the world (he is now the Governor of the Bank of England.) The CAD normally sits 10-30 % below the USD (it was 10% over the USD not too long ago) which is great for our export sector. Also, our money looks a lot better, is more durable and smells like maple syrup when fresh (not kidding). I remember Americans used to call it monopoly money because it was different colours for different denominations. Now the Greenbacks are starting to add shades in to make it easier to tell a $1 from a $100. Wonder where they got that idea from.... All in all there are many reasons why we use the CAD and not the USD. As much as we are similar to Americans, we are very different. We have a completely different type of government, and Canadian values are very different from American values. I could go on and on about the differences but I'll just leave it at that, let me know if you have any specific questions relating to Canada.
Firstly, nice to see a real Canadian is speaking here, because obviously, people living there are more probably inside the topic than any other person here. But, then, it seems the both economy is still linked, since you try to make your money related to USD, even if it's more market-controlled and controlled by the central bank than any fixed currency like it happens sometimes. But that shows a desire to be still linked and associated somehow. About the monetary policy, what is the biggest difference you would think of about? When you talk about values, I can believe you easily, but you see, USD is used in Panama. I think there's more connection between US and Canada than US and Panama. And the values of Panama aren't really the same as the US one. But still, they share the same currency.
I also believe that it is more of the linked economies than the currencies that make Canadian dollars a strong currency. From an ignorant's point of view, the economic ties between the 2 countries - US and Canada - is what's really pushing up the Canadian dollars, i.e. the import and export of goods. Our Philippine peso is down by a few pesos in the exchange rate with the dollar because our economy is not tied up with the American economy, we are more on the Asian market.
One of the main things you do have to consider is the historical factors as well as being next door to the worlds greatest modern super-power brings a bit of an inferiority complex. For the last 200 years Canadian Independence has been a huge topic here, despite our perceived meekness and lack of "American-Style Flag Waving" Canadians are a very independent folk. No politician would ever get a single vote if they proposed adopting the USD. There is so much history in Canadian-American relations, I could go on for paragraphs. If you want to know more do some research or just ask me. Also we have two official languages, so unless USD starts putting French on it's currency it will never be considered legal tender. Of course our economy is linked to the USA, we are right next door it would be foolish not to trade! But we also are linked heavily back to the UK as well as the rest of the commonwealth. To be honest, monetary policy is very similar to the US. We just brought our rate down from 1% to .5%, where USA has been .25% for a long time now. I don't think anyone would be willing to trade our freedom to control our money supply just to make it easier to trade with the USA, it's already pretty damn easy. Our banking system is also vastly different (which is why we weren't hit as had by your 2008 financial crisis, why our real estate market's been red hot for a decade with no signs of a bubble.) We do very well at managing our economy (helps when its smaller with less people, it's easier to manage) so why would we give that power up to another country who is going to make decisions without the slightest consideration for what will happen to us? Better to keep that power in our hands so we can do what's right for us. That Panama comparison doesn't really work. Panama is a tiny place with an economy of like 50 billion, and also heavenly influence and controlled by American interests. A better compairson would be a larger country like say, Mexico. People forget that Canada is a member of the G8, that we always top lists of international well-being, no matter what metric you go by. In fact we often place significantly higher in a lot global rankings then the USA. We pride ourselves on being forward thinking, hard-working members of the global community and giving our citizens all the amenities of living in a modern, developed country (many first-world items that are severely lacking in USA.) I get why from the outside why it might seem like a good idea to adopt the USD, but once you start digging and thinking about it, it's not really a good or viable idea.
It seems like the Canadian dollar has always been worth a bit less than the US dollar, but I could be wrong about this. I mean the monetary system of Canada and the trade is so closely linked to Great Britain in a lot of areas that their economy is uniquely their own. I mean, why would they even adopt the US dollar anyway? They are a completely different country, with their own unique currency, government and so forth.
