Five of six oil-producing Gulf Co-operation Council (GCC) states have this year put fresh impetus behind efforts to create a single currency, agreeing in June to set up the nucleus of a joint central bank — a monetary council — in 2009.
Under the current plan, the monetary council would be established one month after all Gulf governments have ratified the monetary union agreement, said Naser al-Kaud, deputy assistant secretary-general at the GCC secretariat-general.
Gulf central bank governors and finance ministers will study a proposal on September 17 to get the council started after three states ratify the deal, he said.
“What we are trying now is to make it less than five, maybe three, so as to establish the monetary council as soon as possible,” Kaud said in an interview.
“Whether that will happen or not happen we aren’t sure because our countries usually try to be unanimous.”
Central bank chiefs, set to meet for two days before their joint meeting with finance ministers, will also put the “final touches” on the monetary union deal and the council’s charter.
Any decisions made at next week’s meetings in Jeddah would have to be approved by Gulf leaders at their annual summit in Muscat this November.
Saudi Arabia, the United Arab Emirates, Kuwait, Qatar and Bahrain are participating in the project.
“The location of the monetary council will be decided at the joint meeting and they will recommend it to Gulf leaders,” Kaud said, adding there were “no specific proposals” on the site.
Countries in the world’s biggest oil-exporting region this year threw their support behind reviving a monetary union plan thrown into disarray after Oman decided in 2006 it would not join and Kuwait dropped its dinar’s dollar peg in 2007.
Gulf states had agreed to keep dollar pegs intact until the single currency, a promise Kuwait’s neighbours reiterated this year they would keep.
“The agreement will give more credibility to the project,” Kaud said. “By approving the monetary council charter, they are giving the authority to decide on the name, design and the issuance of the currency to the council, it will be powerful.”
