Amero 101: Benefits and Drawbacks

There’s still room for speculation that an Amero currency could be in the works -- benefits and drawbacks:

Save on currency transactions: Dr. Herbert Grubel estimates that Canada alone would save $3 billion from the Amero’s implementation.

Printing inflation would be more difficult: There is large criticism of the Federal Reserve’s practice of printing dollars to pay debts and obligations, which causes the dollar to lose value. With a monetary union, the US would, one assumes, be held accountable by Mexico and Canada, and less free to continue this sort of practice.

Transition risks: The worldwide transition from the dollar to Amero could risk the dollar/Amero’s status as a global currency, which may cause foreign investors to shift to the more established euro and yen.

Same problems: The amero largely does not address problems that currently exist with the dollar, like trade deficits, government debt, and status as a fiat currency.

Shared seignorage: The US currently collects net revenue from issuing the dollar, but with the Amero, any revenues would likely be shared with Canada and Mexico.

Dollar fall: The Canadian and US dollars are worth considerably more than Mexico’s troubled peso. A merging of the three currencies could result in a fall of both dollars to meet the peso.

(Re-)read the whole article at CurrencyTrading.net

Custom Search