The six-nation Gulf Cooperation Council (GCC) has opened dialogue with the UAE and Oman on a monetary union project as part of a major move to ensure the launch of a common currency, said a senior GCC official on Saturday.
“The member states of the GCC monetary union are in talks with the two nations in a bid to persuade them to join the union,” said Anas Al-Saleh, Kuwait’s finance minister.
Al-Saleh said that the GCC monetary union project should be implemented without delay.
“The monetary union is a strategic long-term project for Gulf countries on both the economic and political scales,” Al-Saleh told Al-Eqtesadiah, a sister publication of Arab News .
Al-Saleh said that monetary union members, notably Kuwait, Saudi Arabia, Qatar and Bahrain, have been involved in negotiations with the UAE and Oman to expand the union.
He said that the four members are pushing ahead with the monetary union but said some “technical points” need to be cleared. Arab News could not reach officials at the GCC General Secretariat for further comment because of the weekend, but a study conducted by Yousef K. Al-Ghufli for the Emirates Center for Strategic Studies & Research has advocated an early move for realizing the dream of monetary union and a single currency.
“The GCC monetary union would eliminate transaction costs that GCC citizens must endure due to having several national currencies in one regional bloc,” said the study.
A common market and common central bank would also position the GCC as one entity that would have great “influence on the international financial system,” added the study.
On the other hand, a GCC monetary union will undoubtedly cause each state to lose the flexibility that is associated with having a national currency, said the study.
Financial analysts are watching the latest developments in launching a common currency union. A common union and a common GCC currency will also help intra-GCC trade, which exceeds $92 billion annually, with projections to grow by five percent in 2014.
The UAE and Oman had, in fact, opted out of the proposed monetary union before it was launched in 2010. The GCC has been working to create a monetary union since the early 1980s. In its 29th session, the GCC Supreme Council approved the Monetary Union Agreement and the Statute of the Monetary Council, which developed the legal and institutional framework for the monetary union and identified the goals and tasks of the monetary council.
The member states of the Monetary Union Agreement (Bahrain, Saudi Arabia, Qatar, and Kuwait) ratified the agreement and as a result, the monetary agreement entered into force on Feb. 27, 2010. The board of directors of the Gulf Monetary Council (GMCO) held its first meeting on March 30, 2010. The board of directors recently appointed Khalid Al-Saad from Kuwait as chief executive of the council.
GCC tries to persuade UAE, Oman to join currency talks
