One Market, One Money: Evidence from Canada-United States Economic Integration

摘要

One market, one money, is a simple but accurate way to describe the predominant political view of the European economic integration process. On the east side of the Atlantic Ocean, monetary integration has long been perceived as the natural complement to trade integration (Commission of the European Communities, 1990). The trade integration process started in the early 1950s. The first European attempts toward greater exchange rate stability followed immediately upon the collapse of the Bretton Woods system with the currency 'snake' in 1972 and the European Monetary System (EMS) in 1979. This process culminated in 1999 with the adoption of a common European currency, the euro. Separate currencies were seen as the last major impediment to the free exchange of goods among European trading partners. On the west side of the Atlantic, however, this view has rarely prevailed. Despite the fact that the trade integration process goes back as far as the 1965 Auto Pact and was given momentum by the 1989 Canada-US Free Trade Agreement (FTA), Canada has always maintained a flexible exchange rate regime with its principal trading partners during most of the period. The political will for monetary integration does not appear any stronger now than it was 40 years ago.