Banking in Canadian Dollars a Rising Currency Star
Canada, the closest trading partner with the U.S. thanks to NAFTA, is the second largest economy by land mass and the tenth largest economy by gross domestic product. US-Canada bilateral trade amounts to $1.4 billion per day with around 400,000 people crossing the border daily. Seventy five percent of Canada’s exports go to the U.S. while seventy five percent of its imports come from the U.S. Canada is also U.S. largest investment destination. Though the U.S. and Canada are both highly industrialized and affluent society and are highly-integrated, Canada and its banks fared much better than their counterparts in the U.S. during the global financial crisis.
The Rising Canadian Dollar
After de-pegging from the US Dollar in 1970, Canadian currency became freely floating. Loonie, the nickname of the Canadian dollar, is the world’s seventh most-traded currency and is the sixth largest currency held in central bank’s reserves. Canadian dollar acts as a regional reserve currency for banks and is important to the central banks in Central and Latin America. It is also held in Britain, France and the Caribbean countries due to its trading and European history.
While US growth and interest rate heavily influence the Canadian economy, the Canadian dollar is also heavily impacted by commodities prices as commodities comprise of over sixty percent of Canadian exports. Rise in commodities demand and Canada’s relatively sound fiscal situation have led to the rise in Canadian dollar, crossing parity to the US dollar in 2007 and then recently at end-2010.
Who Benefits from Banking in Canadian Dollars
Given the importance of trade to Canada, the closeness of the US-Canada economies and Canada’s fairly open immigration policy, banking in Canadian dollars can benefit several groups:
- International businesses which need to hold or convert Canadian dollars to protect against exchange rate fluctuations.
- U.S. citizens or corporations which want to benefit from a higher interest rate, a strong foreign currency with a stable economy and sound banking system.
- Canadian citizens living and traveling abroad.
- New immigrants to Canada or non-residents setting up offshore trusts.
Banking in Belize
International banking is gaining prominence in Belize, a growing banking haven with a stable democracy and a tradition for privacy and safety for assets. International bank accounts are not subject to tax or currency control, providing easy access and liquidity when needed. Currently, Belize does not have any tax treaty with the U.S. or Canada. Individual and corporations can open an account in Canadian Dollars and other major currencies such as US Dollars, Euros or Pounds and have access to visa and credit cards as well as internet banking.
In summary, Canadian dollars are gaining in importance in currency trading, investment and central bank reserves. Offshore banking in Canadian dollars enable account holders to benefit from this positive trend as well as asset protection and easy access to their funds anytime and anywhere.