AP/ECON 3430 3.0 A MONETARY ECONOMICS I: FINANCIAL MARKETS AND INSTITUTIONS Fall 2016 Topic 4: Foreign Exchange/Session 4B Course Director: Prof. Brenda Spotton Visano © Brenda Spotton Visano 2016

© Brenda Spotton Visano 2016 Session 4B - Agenda Is it better for Canada to join a Monetary Union with China? Small Group Preparation Large Group Speed Debate Assessment of Arguments and Decision © Brenda Spotton Visano 2016

1 more Policy Option – Monetary (Currency) Union Why do Ontario and British Columbia share the same currency but not Canada and China? Advantages of a Monetary Union = benefits of a standard unit of account and common medium of exchange, and…? Disadvantages of a Monetary Union = loss of national control over policies, financial markets and institutions, and…? © Brenda Spotton Visano 2016

Changing Trade Patterns Currency CERI Weights based on 1999-2001 trade data 2015 Trade Data (Country Imports as % Total Imports) U.S. dollar 0.7618 0.6628 Euro 0.0931 0.0968 Japanese yen 0.0527 0.0158 Chinese yuan 0.0329 0.0710 Mexican peso 0.0324 0.0335 U.K. pound 0.0271 0.0199 2015 Trade Data from Statistics Canada http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/ind01/l2_1130-eng.htm E.g., Canada’s imports from the US (in $millions) was 0.6628 or 66.28% of Canada’s total imports from all countries in 2015. © Brenda Spotton Visano 2016

© Brenda Spotton Visano 2016 Canada – China Trade Government of Canada – Fact Sheet on China http://www.canadainternational.gc.ca/china-chine/bilateral_relations_bilaterales/China-FS-Chine-FD.aspx?lang=eng Canada-China Foreign Investment Promotion and Protection Agreement (FIPA) in force October 1, 2014 and in place for a minimum of 31 years (to at least 2045) http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fipa-apie/china-chine.aspx?lang=eng Hupacasath First Nation led coalition to oppose the Canada’s FIPA with China citing environmental and native rights concerns around land use and energy (coal, tar sands production; pipeline construction) (Council for Canadians http://canadians.org/) The Canada-China Business Council founding members were Barrick Gold, BMO Financial Group, Bombardier, Power Corporation of Canada, Manulife Financial, and SNC-Lavalin. The Hupacasath First Nation is a First Nations government based in the Alberni Valley on the west coast of Vancouver Island in British Columbia, Canada. It is a member of the Nuu-chah-nulth Tribal Council. Hupacasath First Nation consists of approximately 300 members across five reserves. In September 2012, the Government of Canada Foreign Investment Promotion and Protection Agreement signed a trade agreement with Chinese investors giving them control over major assets such as coal on its 232,000-hectare territory. It comes into effect when it has been ratified by both sides. Source: https://en.wikipedia.org/wiki/Hupacasath_First_Nation © Brenda Spotton Visano 2016

BIRT Canada should create a Monetary Union with China Negative Teams (oppose resolution) N1 Group prepare primary supporting arguments N2 Group anticipates opposing arguments and prepares rebuttals Affirmative Teams (agree with resolution) A1 Group prepare primary supporting arguments A2 Group anticipates opposing arguments and prepares rebuttals Judging Team (neither supports nor opposes resolution) assesses merits of evidence presented © Brenda Spotton Visano 2016