North American monetary union

The North American currency union is a hypothetical situation in which the major countries of North America – specifically Canada , the United States and Mexico – would share a common currency. This idea is based on the common European Union currency, the euro. There are also related proposals for a single currency for all of the Americas. The hypothetical currency for both of these ideas is sometimes referred to as the amero.

The Fraser Institute's proposed symbol/logo for the amero

Basis & Origin

The idea for the amero came preliminary from Canadian conservative Herbert G. Grubel, a senior fellow of the think-tank, the Fraser Institute, who came out with a book entitled The Case for the Amero in September 1999, the year that the euro became a virtual currency. Another Canadian think-tank, the conservative, the C.D. Howe Institute advocates the creation of a shared currency between Canada and the United States.

After the report came out, a few Canadian centre-left nationalist groups such as the Council of Canadians strongly oppose any move towards currency union, arguing that it would be harmful for the Canadian economy and for Canadian sovereignty.

The idea envisaged a currency union of the amero would mix the two dollars, and the peso, or it could also simply be dollarization of the American currency.

Unconstitutional

For amero to be the currency for north America the U.S constitution would have to be replaced as section 8 of Article 1 of the constitution states that The Congress shall have power "To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;" and the amero currency would be a violation of the US constitutional and hence unconstitutional.

Support

Canada

One argument is that it would save up to 3 billion dollars in currency transactions. The same authors also stated that Canada's GDP could rise by up to 33% in a twenty year period given the adoption of a single currency.

The idea of a common currency receives more support in Quebec than in the rest of Canada, with over half of the population being in favour of it.

United States

Given the euro's new prominence, a dollarization policy adopted by either Canada or Mexico, or even a change to the proposed amero, could help reassert the dollar's dominance world-wide. However, it is unlikely that this would be sufficient to counter the "threat" of another global currency if only two nations (the United States and Canada) were to adopt it.

Mexico

The possibility of a monetary merger has also been discussed in Mexico as a natural step to take after the NAFTA.

Support in other regions

There are many lower levels of currency cooperation that have occurred in the Americas. A number of nations – such as Argentina, Brazil and Canada – have at times tied their currency to the United States dollar, and in 2000, Ecuador adopted the U.S. dollar as its sole currency. In much of Central America and the Caribbean the U.S. dollar is already a de facto secondary currency.

It serves as parallel legal tender in both Panama (since independence in 1903) and El Salvador (since 2001), and unofficially in Cuba where the convertible peso is currently pegged at 1 peso equals US$1.08 (previously, it was until 24 March 2005, 1 peso = US$1). Some pundits thus argue that currency union is all but inevitable, whether it is desired or not.

Criticisms

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. Differing cultural and social/economic objectives amongst the other western nations would be another point of contention .

A University of California, Santa Barbara paper puts forward the idea that the United States simply has too many advantages from the status quo to move towards a single currency. 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 towards the euro or yen. The Greenback was used in over half of all the world's exports, double the total United States foreign trade. The adoption of an amero could threaten the seignorage that America currently gains from its American dollar. While seignorage would still be gained from the amero, this would be shared between the Bank of Canada, the Federal Reserve and possibly the Bank of Mexico. Therefore, even if the amero was 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.

Secondly, several problems could arise in regards to macroeconomic management. By submitting to a common currency, both countries would lose considerable autonomy in the setting of interest rates among other issues.

In addition, some have posited that the formation of a "North American Union" is being approached without the knowledge and consent of the majority of the people who would be affected by this. One concern raised by the public is that the value of both United States and Canadian currency would fall in order to absorb the historically troubled peso.

North American Union and Amero was also mentioned in controversial document, Zeitgeist, The Movie, as an aspect of continuing globalization.

In the arts and literature

• Infinite Jest by David Foster Wallace takes place in the near future with a common North American Currency, and a strong US-led North American confederation.

Amero coins in circulation

File:100 and 20 amero coins amerocurrency com.JPG

100 (in silver) and 20 (in copper) coins

In August 2007, rumors and conspiracy theories began circulating across the Internet regarding alleged United States Treasury issued "amero" coins.

On August 31, 2007, conspiracy theorist and Internet broadcaster Hal Turner claimed to have arranged for a United States Government minted "amero" to be smuggled out of the Treasury Department by an employee of that organization. To date, no information has come to light substantiating Turner's claims. Overwhelming evidence appears to contradict his story.

The items in question are collectible coins or medallions manufactured independently by a company called DC (Designs Computed) coins, Denver, Colorado. The designer, Daniel Carr, in fact, also crafted the New York and Rhode Island state quarters issued by the United States Mint, circulated in 2001. Carr described the amero coins as "prototypes."

Following Turner's assertions of federal minting of amero, a web site marketing the curio coins released a statement repudiating Turner's claims of a government cover up regarding DC Coin's amero products.

See also

• Monetary union
• Security and Prosperity Partnership of North America
• United States dollar
• Canadian dollar
• Mexican peso

External links

• Security and Prosperity Partnership of North America
• Fraser Institute - The Case for the Amero
• Canada Should Pursue North American Currency Union, from the C. D. Howe Institute
• Alternative Amero Currency Article
• Amero.am - Discuss and read about the Amero
• Canadians Completely Unaware of Looming North American Union