Consider A Continental Currency, Jarislowsky Says

Mr. Jarislowsky, a former Canfor Corp. director, said the loonie's rise to above par with the U.S. dollar is destroying manufacturing and could devastate the forest sector. “We don't have a single mill in Canada which isn't losing cash at the current exchange rate despite the fact we invested hundreds of millions in dollars into new equipment when we had the money,” said Mr. Jarislowsky, chairman of Montreal investment firm Jarislowsky Fraser Ltd. “I believe that if we stay at the present levels the entire forest products industry practically is going to be in liquidation-bankruptcy and there's going to be an enormous loss of employment.” He scorned suggestions that now is a great time to invest in new equipment because the stronger loonie can buy more. ... Mr. Jarislowsky noted that other countries such as China peg their currency. However the federal Finance Department is cool to such ideas. It resolutely opposes the notion in briefing notes prepared for Finance Minister Jim Flaherty and obtained by The Globe and Mail under access to information law earlier this year. Finance officials told Mr. Flaherty that a common currency would mean an erosion of sovereignty for Canada. They say it would ultimately mean Canada abandoning an independent monetary policy and therefore its ability to directly influence economic conditions within its borders. “A North American common currency would undoubtedly mean for Canada the adoption of the U.S. dollar and U.S. monetary policy,” Finance officials say in the briefings. “Canada would have to give up its control of domestic inflation and interest rates.” Finance also believes that alternatives to a common currency, such as pegging the loonie to the greenback, are even worse ideas, notes show. ... http://www.reportonbusiness.com/servlet/story/RTGAM.20071122.wrdollar1122/BNStory/robNews/

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