Pauline Marois, the Leader of the Parti Québécois, is fanciful in trying to minimize how much would change if Quebec became a sovereign country. At least she is right that it would “not change the landscape, we will be able to go to see the Rockies,” but she sounded almost delusional when she said, “There will be no borders, no customs house.”
And then there is the paradoxical attachment of Ms. Marois and other leading sovereigntists to the Canadian dollar.
No, Ottawa could not prevent an independent Quebec from using the Canadian dollar. Any country on Earth can choose to use the loonie. But the government of a sovereign Quebec would severely impede itself if it made the Canadian dollar its currency. It would become a country without its own monetary policy.
The misfortunes of southern Europe’s euro-zone countries, such as Greece, vividly demonstrate this point. When crisis hit, they could not use interest or exchange rates to cushion the blow, since they controlled neither. Mark Carney, the Governor of the Bank of England and former governor of the Bank of Canada, has warned Scotland about the disadvantages of continuing to use the British pound, if it votes for independence in September.
Similarly, pegging one country’s currency to another’s can be disastrous, as happened to Argentina in the 1990s, when it effectively adopted the U.S. dollar. Argentinian exports became crippingly overpriced. A massive default and economic crisis followed.
What’s more, Ms. Marois’ notion of an independent Quebec having a seat on the Bank of Canada’s governing council is ludicrous. The loonie won’t be cut in half, and the Bank of Canada won’t be diced up. The Premier of Quebec is telling fairy tales.