If Canada were annexed by the USA, several economic and financial changes would likely occur, impacting citizens’ holdings in bonds, investments, and the Canadian dollar.
First, regarding bonds and investments, Canadian government bonds and other investments might be converted or exchanged into equivalent U.S. securities. The terms of this exchange would depend heavily on the conditions of annexation, including whether it was voluntary or forced, and the negotiations or terms agreed upon by both countries. The valuation might reflect parity with the equivalent U.S. securities, but there could be fluctuations depending on perceived changes in credit risk or investment potential under new governance.
For the currency, namely the Canadian dollar, one expected outcome could be the gradual phasing out and replacement with the U.S. dollar. This transition might affect purchasing power, particularly if conversion rates are not one-to-one, thus influencing prices of goods and services. Citizens and businesses would need to adapt to using the U.S. dollar for all transactions.
In historical context, one can look at examples such as the unification of East and West Germany in 1990. In this case, East German marks were converted to West German marks at a specified exchange rate, deeply influencing wealth and savings for East Germans. Similar precedents include the annexation of territories throughout history where monetary and asset systems had to be integrated or adjusted to align with the acquiring nation.
In all cases, the specific outcomes depend on detailed negotiations and agreements, including any potential legislative frameworks established to govern the transition. Social, political, and economic integration would be challenging and would require consideration of not just economic factors but cultural and social implications as well. In any speculative scenario, there are numerous variables that could alter the expected outcomes, from resistance and policy disagreements to international reactions and economic sanctions.
