Monetary and Exchange Rate Arrangements for Nafta

Download or read book Monetary and Exchange Rate Arrangements for Nafta written by Mr.Tamim Bayoumi and published by International Monetary Fund. This book was released on 1993-03-01 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper considers the extent to which the North American Free Trade Area (NAFTA) meets the criteria for a common currency area. NAFTA is compared with the EC, a regional grouping for which initial plans for a monetary union are already in place. Most of the anticipated benefits from a monetary union in the EC apply with equal force to NAFTA. However, because the underlying disturbances are more diverse across members of NAFTA, the costs of abandoning the exchange rate instrument are likely to be higher. This is particularly true when NAFTA is compared to the EC’s continental core.