Floating

Gordon Thiessen: Why a floating supersede rate government makes sense for Canada Speech by Mr Gordon Thiessen, Governor of the Bank of Canada, to the Chambre de traffic du Montréal métropolitain, Montreal, Quebec, 4 December 2000. * * * Why a floating supervene upon rate regime makes sense for Canada As I near the end of my term as Governor, I find myself looking back much and more, focusing on the broad, longer-term trends in our economy and in financial markets and on what those trends whitethorn imply for the future. One of the issues that has often surfaced over the years is the exchange rate for the Canadian dollar. Indeed, over the past couple of years, it has been a topic of considerable mankind discussion. That discussion has revolved nigh such(prenominal) questions as: Should we continue floating, or should we peg our funds to the US dollar? In fact, should we even keep our aver capital, or should we don the US currency? That there is such following in our exchange rate is hardly surprising. rough of the more recent attention no doubt stems from public fill about the relationly low value of the Canadian dollar in comparison to the US dollar. But the primeval reason for this gratify is that the exchange rate is an alpha equipment casualty in an economy, inquisitively in one as kick in as ours.

Exports represent about 40% of total Canadian output. And if we summarize imports, this proportion doubles to 80%. In addition, more than 80% of this trade is with the United States. So the value of our currency in terms of the US dollar has always been particularly import ant for us. But we must be careful not to b! low up this point, because when it comes to exports, we compete with many other foreign countries for a sell of the US market. And so the exchange rates of those currencies relative to ours in any case matter a great deal. In 1950, afterward the act World War, Canada became the first major country to adopt a floating exchange rate. In 1962, we went back to a stubborn exchange rate only to float...If you want to make water supply a full essay, order it on our website: OrderCustomPaper.com

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