Author Description

This paper discusses the merits of alternative exchange rate regimes for Canada in the context of other features of the monetary order. A coherent order requires a well-defined goal for monetary policy, one that the authorities are capable of achieving, and that anchors private sector expectations. For the monetary order to be liberal, the relevant authorities should be accountable to the electorate for their performance. These criteria are applied in comparing the merits of: Canada's current monetary order, based on inflation targets and a flexible exchange rate; a North American monetary union; a Canadian currency board; a legislatively fixed exchange rate; and an adjustably pegged exchange rate.