The notion of one currency for the United States, Canada, Mexico and other Latin American countries is not a new idea. The most widely known plan involves a process known as dollarization. Postulated by Kurt Schuler in a 1999 staff report to the Joint Economic Committee of Congress, entitled: “Encouraging Official Dollarization in Emerging Markets.” dollarization occurs when residents of a country use Dollars instead of their own currency. It can also occur regardless of what the local issuing authority desires. Consider Cuba, Ecuador and Argentina, where the dollar is king, even though U.S. bankers are despised. As the sole source of U.S. dollars, dollarization is supported by the Federal Reserve System. The second major school of thought on the subject is monetary union. Rather than adopting the U.S. dollar, a combined currency unit could be developed and a new or combined entity would be created to manage the monetary system of several countries. The model would be the ECB and the Euro. This debate erupted during the Robert Rubin/Goldman Sachs induced Mexican crisis in 1995. The realization was that left to their own devices, all emerging countries, Mexico included, would inevitably debase their currencies to pay their debts. Having fixed exchange rates or dollarization could solve this problem in the dollar’s sphere of influence. The primary reasons put forth for Dollarization are, increased economic efficiency, economies of scale and so forth, and increased trade and investment within its sphere. Monetary union, however, demands cooperation. National monetary policies are ignored. A shared policy must be adopted and what’s good for Mexico or Canada might not be what’s best for the U.S. The issue of seigniorage also takes the fore. That is the profit from creating money, or the difference between face value and cost of creation and distribution. The Federal Reserve Banks keep the majority of the seigniorage in the U.S. and would like that to continue. So would the issuing authorities in all the other NAFTA countries. As we move closer don’t doubt who will win. Remember, the New York Fed rules the world.