Alberta Separation: Monetary Arrangements Pose Significant Challenges

The separation of Alberta from Canada has brought forth several complexities, particularly in regards to monetary and financial arrangements. A useful lesson can be drawn from the 1995 Quebec referendum, where political uncertainty quickly became monetary and financial uncertainty. The same concerns would confront Alberta today.

An independence plan for Alberta proposes transitional use of the Canadian dollar, deferring decisions on permanent monetary arrangements. However, international experience suggests that implementing such a staged transition in an orderly manner could be difficult.

For an independent Alberta, the choice of monetary arrangement would come down to three options: continuing to use the Canadian dollar, creating a new Alberta dollar, or adopting the US dollar. Each option has its advantages and disadvantages. However, from a monetary and financial stability perspective, none may be as attractive as the status quo.