How can six GCC countries implement a single currency
Sultan Alshammari, Economic Department, Social Science School ,Southampton University.
In order to achieve a single currency union by the year 2014, many steps have been taken to achieve this objective, The fact that plans are in place for pegging GCC currencies to the US dollar and creating a custom union with lifting customs on national products shows the success of objectives being met. Furthermore, other steps involving a standard tariff on non-GCC commodities and producing a common market has also been achieved. Consequently, it is evident that GCC
member states have shown the capability for a currency and monetary union. With regards to future plans, the union should look to increase intra-regional trade and investment among countries – this might help to develop non- oil industries in countries and eliminate exchange rate risk and transaction cost. GCC member states have gone a long way in the case of monetary and structural arrangement, there seems to be a convergence towards a currency union. However, Fiscal convergence, policies and arrangements have a long way to go, while political factors seem to be a topic with mixed emotions. On the whole, there seems to be a commitment by GCC member states to achieve a union, however there is reluctance in some political matters. Political matters such as sovereignty seem to be a problem, as it can be seen at least from an economic perspective, that there is the absence of an arrangement for a supra- national institution, to conduct monetary policy. Furthermore, this attributes to a lack of integration in conducting fiscal policy and the different policies to diversify member economies. Read more