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Can NAFTA be a Stepping Stone to Monetary Integration in North America?


  • Dominick Salvatore


Monetary integration refers to the sharing by a group of nations a common currency and central bank. It is most unlikely that the United States will accept a common currency within NAFTA (even if it were the dollar) and a common central bank. With NAFTA not being an optimum currency area, there is little need and benefit for Canada and Mexico to unilaterally dollarize. This, together with strong political opposition to dollarization, leaves little chance that Canada and Mexico will dollarize or even fix their exchange rate vis-à-vis the dollar in the foreseeable future.

Suggested Citation

  • Dominick Salvatore, 2006. "Can NAFTA be a Stepping Stone to Monetary Integration in North America?," Economie Internationale, CEPII research center, issue 107, pages 135-148.
  • Handle: RePEc:cii:cepiei:2006-3tf

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    References listed on IDEAS

    1. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-1025, July.
    2. Vladimir Chaplygin & Andrew Hughes Hallett & Christian Richter, 2006. "Monetary integration in the ex-Soviet Union: A 'union of four'? ," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(1), pages 47-68, March.
    3. Vrowley, Patrick M. & Maraun, Douglas & Mayes, David, 2006. "How hard is the euro area core? : an evaluation of growth cycles using wavelet analysis," Research Discussion Papers 18/2006, Bank of Finland.
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    Cited by:

    1. Dominick Salvatore, 2010. "Measuring the Economic Effects of NAFTA on Mexico," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(4), pages 31-37, December.

    More about this item


    Common currency; dollarization; monetary integration; NAFTA; optimum currency area; monetary block;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration


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