GCC leaders take steps toward monetary union
At the 29th annual GCC summit, being held in Muscat, Oman, Kuwait News Agency (KUNA) reports Kuwait finance minister Mustafa Al-Shimali as saying "We have discussed the final draft of the monetary union agreement thus paving way for (GCC leaders to) signing it to see the light at a maximum date of December 12, 2009."
A GCC Monetary Authority would be likely to be responsible for preplanning the launch of a GCC Central Bank and establish guidelines for the common monetary policy and financial regulations for the GCC countries.
Monetary union is a key step on the road to the as yet un-named single currency. There has been talk of ‘Gulf Dinar’ or even ‘Karam’, in the sense in which the word means ‘honour’ in Arabic.
KUNA says Al-Shimali also said the ministers had approved the statute of the monetary council, to be followed by the creation of the Gulf central bank, and that these proposals were also referred to the GCC leaders for approval.
Separately, Reuters quotes Naser al-Kaud, deputy assistant secretary-general of the GCC secretariat as saying, “The monetary union has been approved. They have not decided the location (of the common central bank), hopefully within the next five months."
Of the six GCC countries, Oman has already announced, back in 2006, that it would not join a single currency and in 2007 Kuwait, alone out of the GCC countries, re-pegged its currency to a basket of currencies rather than the US dollar.
In fact Yousuf Bin Alawi, Oman's minister in charge of foreign affairs said Oman has no intention of joining the Gulf monetary union. The Arabic daily Al Bayan, quoting Bin Alawi reported that Oman will not join the monetary unity project in 2010 and "not even in 2100". However, the paper also said that he added that Oman would not obstruct monetary union among other GCC states.
Earlier in December, the Dubai International Financial Centre (DIFC) followed up a report it had issued in September (The Institutional Framework of the Gulf Central Bank) with an economic note suggesting that the GCC common currency be pegged against a basket of global currencies from 1 January 2010.