There are lots of similarities between Canada and the United States, but one facet in which these two countries differ is their currency. The United States has the dollar, of course, but the former has the Canadian dollar, which is slightly different in value and comes with an interesting history of its own.
Canada played around with the notion of adopting the U.S. dollar in the 1850s, but it eventually settled on a revised currency system. It was officially introduced in 1858, with symbols including CA$, Can$ and C$ to help distinguish it from its neighboring counterparts.
The Canadian dollar, though perhaps less discussed than the U.S. dollar, is one of the most-held reserve currencies in the world. It actually places fifth in the ranking, behind the U.S. dollar (USD), the euro (EUR), British pound sterling (GBP) and the Japanese yen (JPY). It’s also currently the sixth most traded currency, largely in part due to Canada’s significant raw material exports.
Those who have not handled Canadian dollars may be unsure as to what its denominations are. Fortunately, it’s not that different from other currencies. It’s divided into $5, $10, $20, $50 and $100, while CAD is divided into 100 cents and its coins are broken into smaller denominations: 1c, 5c, 10c, 25c, 50c, $1 and $2.
In terms of slang, the Canadian dollar has its own set of terms. Where a U.S. dollar might be referred to as “cash” or “bread”, the Canadian dollar can often be called “loonie” or “huard” or “piastre.” Fittingly, both currencies share the term “buck”, in case you ever freeze up and forget what to call one of them.
As far as rates go, the Canadian dollar has fluctuated between having a fixed rate and a floating exchange rate since the 1930s. The reason behind the fluctuation is the elimination of the Gold Standard, which was decided by the country in 1944 when the Bretton Woods System required them to adopt a policy that kept their exchange rates around 1 percent. Canada opted for a floating exchange rate so that the risk of inflation was minimized, but it eventually went back to fixed rate when the unemployment rate got too high.
While the Canadian dollar usually rises and falls in tandem with the U.S. dollar, the conversion rate is slightly different between. In 2022, one Canadian dollar translates to 0.73 U.S. dollars. It may be minor, but it’s crucial to know if you find yourself in either country.