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Canada's Position Paper UPDATE

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20 views2 pages

Canada's Position Paper UPDATE

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s588120
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Country: Canada

Topic: The US Dollar leads, but will it continue to dominate the world’s
currency?
Committee: Economic and Social Council (ECOSOC)

Canada acknowledges the USD’s long-standing dominance as the world’s primary reserve currency and the crucial
role it has played in maintaining global economic stability. However, Canada believes that this dominance may face
increasing challenges and is unlikely to remain unchallenged in the long term. Given the rise of other powerful
economies, the development of digital currencies, and recent fluctuations in global trade dynamics, Canada
envisions a gradual shift toward a more diversified international monetary system where multiple currencies coexist
to provide resilience and balance.

The Canadian delegation, as a strong proponent of multilateralism and economic inclusivity, supports this transition
towards a multipolar currency system. Such a shift would not only distribute financial influence more equitably
across regions but also minimize vulnerabilities associated with a single reserve currency. While Canada recognizes
the stabilizing role the USD has historically played, it is increasingly evident that the future of global finance may
benefit from a broader currency base, supported by greater international cooperation (Bank of Canada, 2023).

To support this transition, Canada proposes the following actions:

Enhancing SDR and Reserve Diversification: Canada advocates for expanding the role of the International Monetary
Fund’s Special Drawing Rights (SDR) to complement existing reserves, reducing dependency on any single
currency, including the USD. This can create a more resilient international reserve system that reflects the growth of
other major economies and provides a buffer during economic fluctuations.

Advancing Digital Currency Cooperation: Canada acknowledges the potential for digital currencies to contribute to
a diversified global currency framework. Canada encourages international collaboration on digital currency research
and regulatory standards, including Central Bank Digital Currencies (CBDCs). By developing a framework that
ensures transparency, security, and interoperability, nations can explore digital currencies that enhance the efficiency
and inclusivity of the global financial system.

Encouraging Regional and Bilateral Trade Agreements: Canada suggests that countries consider conducting trade in
regional currencies, especially in agreements where both parties wish to reduce currency exchange costs and
dependency on the USD. Diversifying trade currencies can strengthen economic ties among nations while reducing
volatility risks associated with reliance on a single currency.

Supporting Financial Inclusion in Emerging Markets: Canada believes that a shift towards a multipolar currency
system must prioritize financial inclusion for developing economies. By enhancing access to financing, trade
support, and sustainable financial solutions, emerging economies can gain greater stability and autonomy, allowing
them to actively participate in a balanced global economy.
In conclusion, Canada is committed to fostering a future where the global currency system reflects the evolving
economic landscape and advances shared prosperity. Canada envisions a multipolar system that promotes stability,
inclusivity, and fairness across regions, thus providing a robust alternative to a singular USD-centric model.

References:
Bank of Canada. (2023). Exploring the potential of a Canadian digital dollar. Retrieved from
https://www.bankofcanada.ca

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