In summary, Canada and many other countries, almost 40 in total, have been able to successfully chart an independent course for monetary policy and exert domestic control over inflation because of the leeway provided by a flexible exchange rate.
And yet the events leading up to the global financial crisis and its aftermath have led some observers to question the value of the flexible exchange rate in insulating the domestic economy against external financial forces and providing sufficient monetary independence.9 According to these observers, domestic financial conditions were largely determined by global forces, irrespective of the exchange rate regime, thereby rendering domestic monetary policy ineffective.