The Case for the Amero: The Economics and Politics of a North American Monetary Union
By Herbert G. Grubel, Fraser Institute, January 1, 1999
The plan for a North American Monetary Union presented in this study is designed to include Canada, the United States, and Mexico. Under the proposed plan, bank notes and coins of the currency (tentatively called the "amero" ) will have "amero" symbols on one side and national emblems on the other to preserve important symbols of national identity. The conversion of existing currencies into the amero will take place at rates that leave unchanged each country's real income, wealth, and international competitiveness at the time of conversion.
The North American Central Bank, like the European Central Bank, will have a constitution making it responsible only for the maintenance of price stability and not for full employment. The three countries in the union will have representatives on the Bank's board in numbers reflecting their relative size in terms of some weighted average of population and national income, with the weights to be determined through negotiations. Every country will receive the profits from the issuance of ameros used domestically....
Against these gains in economic efficiency must be weighed possible losses in macroeconomic performance. These losses will be small or non-existent....
The United States has less to gain from a monetary union than Canada and Mexico but there will be some benefits. Monetary union will reduce the threat to the power of the US dollar resulting from the greater use of the euro in place of the dollar in the rest of the world. Further, the United States will benefit from having more stable and prosperous countries as neighbours. When the United States joined other international organizations like the IMF, the World Bank, the World Trade Organization, and the North American Free Trade Agreement, the expected economic and political gains appeared to offset the surrender of some national sovereignty. In this tradition, the United States may well find it worthwhile to join the proposed monetary union....
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