March 30th

[Spidy]

Launch timetable for GCC single currency on March 30

Riyadh meet to finalise financial infrastructure, setting up central bank

Zawya Dow Jones

Published: 00:00 March 25, 2010

Kuwait City: A timetable for when a single Gulf currency will be launched as well as a decision on which currency, or basket of currencies it will be pegged to, will be made at a meeting in Riyadh on March 30, Kuwait's central bank governor said Wednesday.

At the March 30 meeting "plans will be designed and a time frame finalised for the financial infrastructure required to launch a single currency and for the [establishment] of the Gulf central bank," Shaikh Salem Abdul Aziz Al Sabah told reporters at a press conference.

When asked if the Gulf single currency could be pegged to the US dollar, Al Sabah said "I don't know."

Saudi Arabia's central bank governor said in March 2009 that the single currency could initially be pegged to the dollar and then allowed to float.

Saudi Arabia, Kuwait, Qatar and Bahrain are forging ahead with plans for a monetary union after the UAE and Oman opted out of the plans.

The UAE dropped out last year after it was decided that the union's central bank will be based in Riyadh, the Saudi capital.

Economists argue that the Gulf monetary union needs to establish monetary independence for member states, all of which are pegged to the US dollar, except Kuwait. But Kuwait is pegged to a basket of currencies in which the dollar is expected to dominate. The peg forces Gulf countries to mimic US Federal Reserve actions, such as interest rate cuts, despite having a very different economic and inflationary environment to the US.

"The GCC should gain monetary independence," said Philippe Dauba-Pantanacce, Standard Chartered Bank's senior economist for the Middle East and North Africa.

UAE won't join union

UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi said there are currently no talks aimed at bringing his country to rejoin the Gulf monetary union.

Bloomberg

[HINK]

Interesting...could play a part in the RV

[allIneedisonemillionusd]

I would think Iraq needs a proper value of the IQD to be included in the GCC. I would imagine a rate for the IQD comes before the announcement of who is in the basket of the GCC (official).

[wizard96]

The GCC will take at least a year to be put in place Iraq cannot wait that long

IMO

[allIneedisonemillionusd]

Agreed Wizard96! I was just meaning that Iraq will RV prior to substantial movement on the GCC, as I believe Iraq will be a major player in the GCC. They will enter that partnership with a strong currency. IMO

[Barbann]

There was an article a while back that stated it would take them 5 or 6 years to accomplish this. At that point the speculation was that IQD would come out close to the GCC rate so when it went to the common currency there would not be such a disparity between the IQD and the new Currency. They plan to put out the new currency alongside each country's old currency and then phase out the old until the new is all that is left.

[Riverdawg]

Ugh, didn't mention Iraq as one of the possible members??????

[Nate]

I'm with Daffy, I don't see "Iraq" anywhere in this info. It's possible but I think we are making big assumptions here. Interesting concept though, we need some of the smarter folks to explain how an dinar RV would affect the GCC considering most of the GCC countries are nervous about Iraq putting out oil and cheaper price. Maybe if the GCC incorporated Iraq they could control Iraq's oil output and price?

[truckerron49]

This is not the first time this has been published. The words may be changed here and there, but it is old news.. Sorry......