It was coined in 1987, literally as well as figuratively.
To vast outcry about its bulk, the Canadian $1 bill was replaced in 1987 by a heavy metal coin, significantly bigger than a .50¢ piece. On the front is an image of the Queen of England. On the back a loon patrolling a lake. Immediately, the coin was billed as ‘The Loonie.’
Nine years later, in 1996, the Canadian Mint replaced the $2 bill with an even bigger coin than the loonie, actually, a coin within a coin; the Queen on one side and three polar bears on the other. Immediately, it was deemed ‘The Toonie.’
Usage, being usage, terms tend to stick. Today, there are still articles about the Canadian dollar but, increasingly, those articles also refer to the ‘loonie’ as a generic term for all Canadian currency. As an example, a paragraph in the story linked to above begins: “The loonie isn’t the only currency to take flight lately amid U.S. dollar weakness …”
So, it looks like what began as a simple, even pejorative nickname for a much maligned coin could be morphing into a term of near-endearment for the wider panoply of Canadian denominations.
Now, maybe the ‘Monopoly’ money tag Americans have assigned to our multi-coloured bills might give way to more imaginative zoological epithets, the more bitter the higher the loonie flies.
Beavers and loonies and moose, the horse made by committee. Some people might have a hard time taking this country seriously.