These pressures again led to concerns that an inflationary buildup in Canada could lead to a boom-bust economic cycle. And once again, there were fears of speculative short-term inflows that would make the problem worse.
The authorities looked at a number of alternatives, including the setting of a new higher value for the Canadian dollar against the U.S. dollar and a revaluation with a wide band. But these options were rejected because they might have invited further speculative pressures. It was clear that the least risky option for Canada was to return to a floating currency.