Inflation targets versus international monetary integration: a Canadian perspective

The debate about Canadian-US monetary integration is surveyed. The choice is not just among exchange rate regimes, but among overall monetary orders, and questions of policy credibility and political accountability are crucial to it. Canada's recent economic performance under inflation targets, and arguments that the flexible exchange rate has undermined real economic performance are assessed. The most economically attractive among alternative monetary orders-the adoption by Canada of the US dollar with provision for meaningful Canadian input into policy decisions and supervision of the financial system-is not politically attainable. Intermediate arrangements are unattractive and clearly inferior to Canada's current monetary order.