Dodge refuses to rule out common currency

"I wouldn't rule it out," Mr. Dodge said, when asked if could live to see the existence of a shared currency with the United States.

But he listed a number of preconditions, including still freer trade between Canada and the United States, shared labour and capital markets, and an international institution to manage a joint currency.

"You would have to have some change of heart politically in Washington that would give up some control to an international body," he added.

"It's very difficult for me to see from an analytic standpoint, those conditions coming together certainly in the near term in a way that would make any sense."

Mr. Dodge will be in New York today, along with Paul Martin, the finance minister, to speak to Wall Street bankers and analysts as part of their campaign to lend verbal support to the Canadian dollar, which closed at US62.94c yesterday. He is expected to say the Canadian economy should recover in tandem with, or perhaps ahead of, the U.S. economy.

In a separate interview after a speech in Saskatoon, Mr. Dodge said he believed Canadian businesses have become too focused on supplying the U.S. market, missing opportunities outside North America and leaving themselves open to problems with protectionist policies.

"I find it a little disappointing that in the 1990s Canadians have become very North American-centric, whereas if you go back to the 1970s or the 1960s, they really did look much more globally," Mr. Dodge said.

Mr. Dodge acknowledged the U.S. is our most important trading partner, but said there are downsides to such a relationship.

When the U.S. economy slows, Canada's does, too. In the third quarter, Canada's economy shrank for the first time since 1992 because of slumping demand from the U.S., which spent most of 2001 in a recession. Canada's economy advanced at a 4.7% annual pace in 2000 when exporters were trading with an expanding U.S. market.

As well, Canadian companies remain vulnerable to protectionist measures. "There actually has been a fair bit of penetration in other U.S. markets by smaller Canadian firms. That issue is worrying," Mr. Dodge said.

The dollar's slide stopped last week after he said a low dollar hurt prospects for a rebound and that he wouldn't rule out using the Bank of Canada's currency reserves to prop up the dollar.

He repeated his traditional take on the dollar, saying: "We at the bank conclude very clearly that a floating regime is the most advantageous for Canada."

Related Links: Speech by David Dodge given Tuesday.