High dollar has a downside
http://www.montrealgazette.com/news/High+dollar+downside/4743387/story.html


Summary

Bank of Canada Governor Mark Carney said Friday that the high Canadian dollar has lessen a lot of the country's manufacturing competitiveness by raising costs of its exports in foreign markets. During an interview on CNBC, Carney said that our competitiveness in manufacturing has gone down a massive amount, versus the United States and third countries as well. He also says that the strong Canadian dollar created a disadvantage to growth and inflation in Canada. To add, our country was already being hit by supply-chain disruptions caused by the March 11 Japan earthquake. At this point, growth has been slowed quite noticeably in the second quarter. Canada's commodity-based economy has benefited from strong demand for oil and other important materials and has been a well evolved country amongst the other developed countries. Carney mentioned how the Canadian financial system was 'firing on all cylinders" which strengthened the Canadian economy because there were no credit restrictions on businesses seeking to borrow for expansion. Carney, who was en route to a Bank for International Settlements meeting in Switzerland, was asked if he expected to see some form of a transaction tax imposed on key global banks. He then said, that there will be an additional charge on the globally systemic important financial institutions.

Connections

The most recognizable form of money in Canada is paper currency. These are referred as legal tender which is exchanged for good and services. Which brings back to the topic of the increase in value for the Canadian dollar lessening a lot of the country's manufacturing competitiveness by raising costs of its exports in foreign markets. This also means that it would make the prices of our goods in other countries more expensive. This would decrease the amount of exports to countries versus the U.S. and other third countries. Which means the money supply in other countries would decrease due to the expensive imported goods from Canada it would decrease the purchases of goods and services made. In the textbook, the supply of money represents the amount of purchasing power available. The high dollar not only affects the money supply in other countries but also the Canada's manufacturing competitiveness and amount of production.
This article mentions about the impact that high dollar has on Canada's manufacturing, growth and inflation. However in connection to the textbook, I have also identified the impact it has on other countries.

Reflection

After making connections with the textbook to the article, I discovered other impacts the high dollar has other than on Canada. My first thought was that the most impact would affect us citizens when purchasing goods and services. However, it affects mainly other countries such as the U.S. and other third countries. Especially when it comes down to exporting, the high dollar raised the costs of exports in other countries. It also affects the growth and inflation in Canada. I'm guessing it affect the growth of Canada when it comes to the competitiveness in manufacturing going down a tremendous amount against other countries which in return, is a reduction in production. I make surprised to discover the affects a simple increase in dollar value has on Canada and how it affects other areas of the economy.

How long do you think its going to take to get to all virtual cards? How many years?
Judging by the article about smart phone money (http://business.financialpost.com/2011/04/23/smart-phone-money/) and another article I found about virtual prepaid debit cards (http://www.getdebit.com/debit-news/4471/the-bancorp-bank-to-offer-virtual-prepaid-cards/), I get the impression that many technology based companies such as Near-field communication (NFC) is leaning towards finding different ways to bring about the digital replacement of the centuries-old wallet, starting this year. Company called Net1 Virtual Credit Card, Inc., has also created a new product in the prepaid industry that offers consumers a "Virtual Payment Card" that can be accessed on a mobile phone. These articles state that the companies are aiming to produce more digital products replacing physical debit/credit cards within this year of 2011. I, myself have had a debit card for almost 3 years now and ever since I got myself an iPhone, last November, I began using online banking apps. I can tell this is the start of my first step towards virtual debit/credit card payments. Therefore, my predication is that, it will take at least 3-4 more years for people to settle in and fully get use to digital transactions and payments.

Why?
Within the 3-4 years, the first year or two would be the transition and getting use to using virtual payments. The next few years would be the increase in usage of virtual cards and so on. Numerous companies have just begun to receive positive results from their newly produced products, that can be accessed through mobile phones, it won't be long until it becomes world wide. Especially for Net1 Virtual Credit Card, Inc., with their new product being a smart phone application, VCpay, and also with the lease of iPhone4, BlackBerry Torch, and many more, the digital replacements will definitely come in effect fast. VCpay was launched a month ago and sent to tens of thousands of subscribers, which also proves the rapid spread of smart phone virtual credit card usage.

Who will not be on board with this new virtual wallet?
People like new comers wouldn't be likely to use it because getting started would affect the start of financial cost. For instance, to become a virtual banker / credit card user, you would have to first sign up for a credit card. Secondly, get a smart phone which costs around $500 unless you sign a three year contract which also adds up. Thirdly, start a data plan which also costs around an extra $20-40 on top of you base plan. People who have low income and are struggling financially would definitely not use this new method. Also, people like my mom who barely uses her debit/credit card and doesn't own a phone wouldn't use it either. The start up cost would be a hassle and wouldn't be convenient. Also for many of the younger generation teens and seniors wouldn't be very much a part of this new transition. I'm sure majority of parents wouldn't allow their children to get their own debit/credit card until they're 18 years old. As for seniors, many of my grandma's friends as well as her, don't use any sort of credit/credit card because most of the places they shop and dine at are "cash only" places. It very much depends on the person's life style, differs from age, culture, and habits.

What companies are going to be affected negatively by this? Name 3.
Companies like MasterCard Worldwide, Visa Coorporate and American Express would be affected negatively by this change. The MasterCard Worldwide company, contributing in the rise of the electronic payments industry has helped the growth of the economy. MasterCard Worldwide provides a combination of expertise, industry-leading insight, and globally integrated resources. With the transition of virtual payments and transactions, the MasterCard company would be struggling and dealing with a lot of changes to adjust their strong partnerships with customers to the usage of digital cards. Visa Coorporate also is a global payments technology company, connected to many consumers, businesses, banks and governments in more than 200 countries and territories. Governments here and abroad have switched to digital currency instead of check for benefits payments and purchasing in order to increase efficiency and lower costs, saving taxpayers money. With the changes in paying methods, many of their networks would also be forced to do the same, causing possible loss in connections and partnerships. Same with American Express, being a significant contribution to the economy, the changes would cause their company to face many changes and adjustments.

Who is going to make money from this? Name 3.
Cell phone companies, internet providers, and companies that are developing virtual card payments would be benefiting from this change. Cell phone manufacturers such as Apple, BlackBerry and HTC would benefit because with their new smart phones being released, the use of online banking and payments have increased as well. This connects to data plans which are provided by internet companies such as Telus and Shaw who then partner up with cell phone companies like Fido and Rogers. From cell phone producers to mobile phone carriers to internet companies to companies involved in virtual credit cards. This whole cycle shows how the change from using credit cards to virtual cards would benefit who and how.


Sources:
http://business.financialpost.com/2011/04/23/smart-phone-money/
http://www.getdebit.com/debit-news/4471/the-bancorp-bank-to-offer-virtual-prepaid-cards/
http://www.mastercard.com/us/company/en/ourcompany/the_mastercard_story.html
http://en.wikipedia.org/wiki/American_Express
http://corporate.visa.com/about-visa/our-business-index.shtml