Gulf money union ‘must focus on regular meetings to make 2015’

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“If they meet regularly from now until 2015, I think they could reach this goal,” Mohamed al-Mazrooei, assistant secretary general for economic affairs at the GCC, said in Dubai yesterday.

Four Gulf states announced on December 15 the creation of a Monetary Council, a step toward establishing a European Union- style shared currency. The board of the council, which will set a timetable for establishing a joint central bank and chose a currency regime, includes representatives from Kuwait, Saudi Arabia, Bahrain and Qatar.

Oman and the UAE have opted out.

Kuwaiti Foreign Minister Sheikh Mohammed Sabah al-Salem al- Sabah said on December 8 that a single currency may take 10 years to establish. The original target was this year.

The GCC members agreed in 2001 to create a shared currency which would help them integrate economies and pursue a monetary policy independent of the US. All GCC states except Kuwait peg their currencies to the dollar.

“Experience proves that pegging to the dollar from the 1970s until now has benefited the GCC countries,” al-Mazrooei said. “They should see what is good for the GCC – whether it’s a peg to the dollar or to another currency or to a basket, at the time of the launch.”

“Riyal” and “dinar” have been proposed as names for the single currency, said al-Mazrooei, who suggested the name “juman” or pearl in Arabic.

Oman pulled out of the project in 2007 and the UAE, the second-biggest Arab economy, withdrew in 2009 after the Saudi capital, Riyadh was selected as the location for the Monetary Council. The UAE has no plans to rejoin the union project, the country’s central bank governor said on January 6.

“I heard that there are some attempts to persuade the U.A.E. to rejoin,” al-Mazrooei said. “U.A.E. is a very important country. It accounts for around 25% of the GCC economy so it will be for the benefit of both.”

The currency regime of the future currency will be decided by the Monetary Council, which will set a “road-map” for the project, he said.

 

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