Gulf states to introduce a single currency? Not likely!

After the recent news on the proposed single currency for East Africa, could there be another group of countries moving towards a single currency? The Gulf Cooperation Council (GCC) consists of Bahrain, Kuwait, Qatar, Saudi Arabia, the United Arab Emirates and Oman. These six countries have been discussing a currency union similar to the Eurozone for more than 15 years. There was once even a name for the currency: the Khaleeji. That currency was turned down however in 2009 and talks seemed to go nowhere from then on. Sometimes they agreed on a single currency, then one country said no, then two countries etc. Eventually Oman and the United Arab Emirates pulled out of these talks altogether.

Now after a few years of silence on the subject, there is all of a sudden a rumour that the single currency will be announced at the end of December. This common currency to be announced by Bahrain, Kuwait, Qatar and Saudi Arabia would be pegged to the dollar, an anonymous source close to decision-makers said.

In September, an official of the European Central Bank (ECB) said that the GCC should not introduce a common currency before its members have a clear common objective. Yves Mersch, an executive board member of the ECB, reportedly said at a global financial summit that no union of states would be ready for a common currency if there was no political consensus. The Wall Street Journal, which also reported on the matter, states: "... analysts and observers are mostly sceptical of this happening anytime soon. For one, they say, there has been no news that significant progress has been made toward a monetary union."

The GCC itself denounced the rumours last night, saying: "The Monetary Council affirms that the reports by some newspapers and websites over the date of the issuing of the single Gulf currency are completely false, not based on accurate information nor reliable sources".

Steven Tuesday 03 December 2013 at 3:25 pm | | news
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