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Canadian dollar

Alternatives to the Swiss Franc - Part 3 of the 6-part series on currencies

In the third part of our series “Alternatives to the Swiss Franc” we would like to introduce you today to the Canadian dollar as a currency alternative to the Swiss Franc. After two Scandinavian currencies, we now turn to North America. ”Canadian dollar” is the name for the currency of Canada, the second largest country in the world in terms of area - after Russia. Internationally, the abbreviation CAD is also commonly used for the Canadian dollar, which, by the way, is not just an abbreviation used in banking, but a currency abbreviation defined in ISO 4217.

The origin of the Canadian dollar in 1871 The origin of the Canadian dollar in 1871

The history of CAD in its present form begins in 1871, when the dollar was introduced in Canada in April of that year. At that time, it hardly played a role as a currency alternative for foreign investors, rather it was initially about a further step in the unification of the country that had arisen from British and French colonial territories. Since then, a single currency has applied in all Canadian provinces, which was previously not the case for historical reasons. The legal basis for the introduction of a single Canadian currency was the Uniform Currency Act, known in French as Loi sur l’uniformité de la monnaie. Originally the CAD was gold-backed - as were numerous other currencies of the time. However, after several decades, gold cover was abandoned in 1933.

The CAD as a “bilingual” currency

As with the US dollar or the euro, the Canadian dollar was also divided into 100 cents per dollar. The Bank of Canada or Banque du Canada is responsible for issuing Canadian dollars. Canadian coins are minted by the Royal Canadian Mint, while the banknotes are issued by the Canadian Bank Note Company and BA International Inc, the former British American Banknote Company Ltd. A special feature of the CAD is that the coins be coined not only in one language, but in the two national languages ​​English and French. This regulation has been in effect since 1973 and takes into account the coexistence of English-speaking and French-speaking parts of the country within Canada. Colloquially, the English terms “buck” or “loonie” are also used for the Canadian dollar, while Francophone Canadians also speak of “piastre” or “huard”. A second, perhaps strange-looking peculiarity is also worth mentioning: because the English queen is also nominally As head of state of Canada, the current British monarch Elizabeth II is also depicted on the obverse of all Canadian coins.



The Canadian dollar as a currency alternative to the Swiss franc The Canadian dollar as a currency alternative to the Swiss franc

The de facto elimination of the Swiss franc as an “obvious” escape currency for euro-skeptics from the European euro countries has also brought the Canadian dollar back into focus as a currency alternative. Even if this is often overshadowed by the US dollar in public perception, its importance should not be underestimated. After all, it is one of the so-called “G-10” currencies. The fact that not only several euro countries, but also the USA are struggling with considerable budget and debt problems, has noticeably increased the importance of the Canadian dollar as a currency alternative in the eyes of institutional but also many private investors. This development is completely new but not, because German private investors have already invested in CAD space in the past. For example, millions of euros from German investors flowed into closed-end real estate funds that invested in Canadian properties. A key motive for such investments in Canada is likely to come to the fore again now when investors turn to the CAD as a currency alternative to the Swiss franc: It works above all about the high stability and the good economic prospects of the country, which instill confidence in investors and stand in a corresponding contrast to the crisis scenarios in other countries.

Canada as an important economic nation Canada as an important economic nation

The popularity of CAD as a currency alternative is largely based on Canada's economic solidity. Canada is one of the most developed countries in the world and also one of the most prosperous. The wealth of natural resources is remarkable. For example, about 20 percent of the world's demand for nickel is met from mining in the province of Ontario alone, and Canada is the country with the second largest oil reserves after Saudi Arabia, as well as extensive forests accounting for 10 percent of the world's forests and numerous deposits other mineral resources. The service sector is well developed and generates around three quarters of the gross domestic product. After a long phase of solid growth from 1993 to 2007, the global crisis also affected Canada and led to a recessive phase at the end of 2008, but since then the economy has recovered significantly . Canada is more stable than other leading industrial nations in several ways. For example, the government had to report a national deficit in 2009, but this was the first time in twelve years in which the national budget had closed in surpluses. After the financial crisis, the Canadian banking sector recovered quickly and proved to be one of the strongest in the world. This was due not least to a lending policy that was much more conservative than the situation in the USA and its relatively strong equity base. The strong appreciation of the CAD since the turn of the year 2008/2009 and its growing importance as a currency alternative is a burden for the export-oriented industries of Canada, but clearly shows the appreciation of the international financial markets towards the Canadian currency and the economy behind it.



Canadian dollar remains an important currency alternative The Canadian dollar remains an important currency alternative

Legal certainty, political stability and good economic prospects not only make Canada interesting for investors, but also ensure that it is one of the “classic” immigration countries. Canada is the dream destination of many emigrants from other countries around the world and has pursued a consistent, clearly defined and transparent immigration policy for many years. In terms of population, Canada today has the highest immigration rate of all territorial states worldwide. The regulations for immigration to Canada ensure a steady influx of well-trained workers - and of course also allow the Canadian domestic market to grow with additional consumers. Against this background, stability and solid growth should also be expected in Canada in the future. The Canadian dollar should therefore continue to be an interesting currency alternative for all those who have previously relied heavily on the Swiss franc and now want to “immigrate” to Canada at least in monetary terms .

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More currency alternatives More currency alternatives

Part No. 1: Norwegian Krone
Part No. 2: Swedish krona
Part # 3: Canadian Dollar
Part # 4: Singapore Dollars
Part No. 5: New Zealand Dollar
Part No. 6: Australian Dollar