Currency Unification in Gulf Region: An Appraisal of Preparations (CD)

Abstract

Creation of a common currency area is one of the cheri shed goals of t he Gulf Cooperation Council (GCC) countries right from the beginning. This goal was formally declared soon after the foundation of the GCC in 1981. The member states of the GCC are moving towards launching a single currency by January 2010, an advanced step towards monetary union . These countries are characterized with a great degree of s imilarities whether political, economic , or social. This provides an advantage many regional economic group s lack. Using formal and informal criteria, it has been established whether GCC is an optimum currency area (OCA) . Based on the traditiona l OCA criteria, it has been f ound that GCC countri es are yet to fulfill t he necessary pre- conditions for the establi shment of Currency Union (CO) . The SWOT methodology utilized in t hi s study presents a list of activities t hat must be thought of carefully before and after the year 2010, when the singl e currency is p l a nned to circul ate . Time is approaching fast, thus, GCC states s hould take serious steps in the remaining few years. A quali ta ti ve approach, is applied to check the readiness of t he Gulf r egion fo r common currency. According to the data ana l ysis, the Gulf region is not ready to launch a common currency in January 2010. There are many barriers that must be minimized to launch a common c u ~rency in near the future.