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On a Common Currency for the GCC Countries

Author: Mr.Esteban Jadresic

Publisher: International Monetary Fund

Published: 2002-12-01

Total Pages: 27

ISBN-13: 1451969481

This paper assesses the eventual replacement of the currencies of the GCC countries with a common currency. It concludes that a properly implemented currency union may contribute to enhance economic efficiency in the region, deepen regional integration, and develop its non-oil economy. However, it cautions that a currency union should be seen as only one component of a much broader integration effort. This should include the removal of the distortions that inhibit intraregional trade and investment, agreements on policy frameworks to ensure macroeconomic stability, and further political integration. The paper also addresses the choice of exchange rate arrangement for the unified currency.

Is the Gcc Also a Common Currency Area?

Author: George Tawadros

Publisher: LAP Lambert Academic Publishing

Published: 2013

Total Pages: 64

ISBN-13: 9783659337147

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In this book, the feasibility of the Gulf countries forming a common currency area is assessed using two distinct, but complementary, approaches. The empirical results based on the size of demand and supply disturbances, their cross-country correlations, and the speed of domestic adjustment identifies a grouping of countries (Bahrain, Oman, Saudi Arabia, and the UAE) for potential monetary unification. In addition, the empirical results show that the six member countries share common long-run and short-run cyclical movements. Furthermore, an estimate of the output loss in relinquishing policy autonomy to join a regional currency arrangement is provided. These estimates appear to be relatively small, and are likely to be less than the efficiency gains from adopting a common currency.

Monetary Union Among Member Countries of the Gulf Cooperation Council

Author: Mr.Ugo Fasano-Filho

Publisher: International Monetary Fund

Published: 2003-08-29

Total Pages: 80

ISBN-13: 9781589062191

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The six member countries of the Gulf Cooperation Council (GCC)--Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates--have made important progress toward economic and financial integration, with the aim of establishing an economic and monetary union. This paper provides a detailed analysis of the economic performance and policies of the GCC countries during 1990-2002. Drawing on the lessons from the experience of selected currency and monetary unions in Africa, Europe, and the Caribbean, it assesses the potential costs and benefits of a common currency for GCC countries and also reviews the options for implementing a monetary union among these countries.

The GCC Monetary Union

Author: Mr.S. Nuri Erbas

Publisher: International Monetary Fund

Published: 2003-04-01

Total Pages: 26

ISBN-13: 1451848811

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We compare the dollar peg to a dollar-euro basket peg as alternative exchange rate regimes for the incipient Gulf Cooperation Council (GCC) currency union. Quantitative evidence suggests basket peg does not dominate dollar peg for improving external stability. However, as GCC exports and external financial assets become more diversified, a more flexible exchange policy may be necessary for competitiveness and stability. Pegging the prospective common GCC currency to a basket, like the dollar-euro basket, may provide a conservative transitional strategy toward a more flexible exchange rate policy.

Currency Union and Exchange Rate Issues

Author: Ronald MacDonald

Publisher: Edward Elgar Publishing

Published: 2010-01-01

Total Pages: 209

ISBN-13: 1849805377

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This book written by leading academics and practitioners in the field brings together cutting edge research on exchange rate regime and monetary union issues. There is a particular focus on the implications for member states of the Gulf Cooperation Council (GCC) which is itself working towards forming a monetary union for the Gulf States. The relatively dramatic movements in the US dollar in the recent past, and also in the early 1990s, have called the practice of pegging to the US dollar into question for a group of countries that predominantly rely on hydrocarbons as their primary export. The book considers the key issues which must be addressed by the GCC in trying to form a monetary union for the Gulf countries and also the rigid pegging of member states currencies to the US dollar. The proposed monetary union raises clear issues in terms of the appropriateness of such a regime for these countries and whether, for example, the necessary institutional mechanisms are in place ahead of the proposed union. Currency Union and Exchange Rate Issues brings together the perspectives of a group of experts who focus on these important issues, and provide analysis of the policy options. Academics, policymakers and postgraduates in international finance will find much to consider and learn from in this informative book.

Monetary Union in the Gulf

Author: Emilie Rutledge

Publisher: Routledge

Published: 2008-07-30

Total Pages: 160

ISBN-13: 1134046316

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This book examines the proposed currency union of the Gulf Co-operation Council (GCC) Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates which is due to come into effect in 2010.

GCC Monetary Union and the Degree of Macroeconomic Policy Coordination

Author: Bassem Kamar

Publisher: International Monetary Fund

Published: 2007-10

Total Pages: 40

ISBN-13:

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Coordinating macroeconomic policies is a pre-requisite to a successful launch of the common currency in the GCC countries. Relying on the Behavioral Equilibrium Exchange Rate approach as a theoretical framework, we apply the Pooled Mean Group methodology to determine the similarity of the impact of a selected set of macroeconomic indicators on the real exchange rate in each country. Our empirical evidence points to a clear coordination of monetary policy, fiscal policy, government consumption, and openness across the member countries. While RER misalignments also show a substantial convergence building over time, differences in the misalignments of the two polar cases remain rather substantial, calling for further coordination and policy harmonization.

The GCC Monetary Union

Author: George T. Abed

Publisher:

Published: 2006

Total Pages: 25

ISBN-13:

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Some Principles for Development of Statistics for a Gulf Cooperation Council Currency Union

Author: Russell C. Krueger

Publisher: International Monetary Fund

Published: 2006-06

Total Pages: 28

ISBN-13:

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Looking ahead to the creation of a Gulf Cooperation Council (GCC) Currency Union in 2010, the paper covers some implications for the statistical programs of the GCC countries. Despite uncertainty over the structure of the proposed union, the paper envisions several types of mutually reinforcing statistics-convergence criteria, statistics on the core policy variables and instruments, additional macroeconomic data, specialized statistics related to the economic and institutional conditions within the union, and public information. Major changes to national statistical programs are needed that should begin soon.

Economic Diversification in the GCC

Author: Mr.Tim Callen

Publisher: International Monetary Fund

Published: 2014-12-23

Total Pages: 32

ISBN-13: 1498303234

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Abstract: The economies of the six Gulf Cooperation Council (GCC) countries are heavily reliant on oil. Greater economic diversification would reduce their exposure to volatility and uncertainty in the global oil market, help create jobs in the private sector, increase productivity and sustainable growth, and help create the non-oil economy that will be needed in the future when oil revenues start to dwindle. The GCC countries have followed many of the standard policies that are usually thought to promote more diversified economies, including reforms to improve the business climate, the development of domestic infrastructure, financial deepening, and improvements in education. Nevertheless, success to date has been limited. This paper argues that increased diversification will require realigning incentives for firms and workers in the economies—fixing these incentives is the “missing link” in the GCC countries’ diversification strategies. At present, producing non-tradables is less risky and more profitable for firms as they can benefit from the easy availability of low-wage foreign labor and the rapid growth in government spending, while the continued availability of high-paying and secure public sector jobs discourages nationals from pursuing entrepreneurship and private sector employment. Measures to begin to address these incentive issues could include limiting and reorienting government spending, strengthening private sector competition, providing guarantees and financial support for those firms engaged in export activity, and implementing labor market reforms to make nationals more competitive for private sector employment.