Business | Economy
Gulf common currency likely to make a big impact
A common monetary unit being discussed by the six-nation Gulf Cooperation Council (GCC) will emerge as a global currency like the dollar and the euro, according to a top Dubai official.
- Staff Report
- Published: 23:40 July 4, 2008
Dubai: A common monetary unit being discussed by the six-nation Gulf Cooperation Council (GCC) will emerge as a global currency like the dollar and the euro, according to a top Dubai official.
The GCC aims to have a monetary union in 2010, but Saudi and UAE central bank governors have expressed doubts about the member states meeting that deadline.
The new common currency is part of the regional economic integration.
"The region is growing fast - at 11 per cent a year. At this rate the GCC will be the fifth biggest economy in 2020 and its single currency will emerge as a global currency alongside the euro and the dollar," said Nasser Saidi, chief economist of the Dubai International Finance Centre (DIFC).
He said that in the 1970s and 1980s petrodollars were coming in and going out without benefiting the economy, as there was no stock exchange or financial market to leverage the benefits of that flow.
"Now that we can control that wealth and invest it, foreigners are welcome to come, operate, and list their companies on one of the region's stock exchanges," he said.
Saidi also called for stronger ties between Europe and the GCC countries, a sentiment backed by the Abu Dhabi Exchange (ADX), whose representatives signed a strategic partnership agreement with NYSE Euronext.
Saidi made these remarks at the International Financial Forum held on July 2 and 3 in Paris, according to a statement issued yesterday.
Big advantages
"The advantages of cooperation are far bigger than merely technical; the expertise and people are more valuable," said ADX chief executive Tom Healy.
The forum discussed the global rise of Gulf sovereign wealth funds and the region's influence in the world economy.
Attendees included more than 1,200 representatives of investors, banks, financial institutions, GCC delegations and European Commission and Parliament officials.
Augustin de Romanet, chief executive officer of Caisse des Depots, the French State Fund, underlined the role of SWFs in the global market and their growing capitalisation "from $3 000 billion today to $15,000 billion in the near future."
Jean Paul Villain, head of strategy unit of Abu Dhabi Investment Authority (ADIA), and Arif Sherani, director of investment strategy of the Qatar Investment Authority (QIA), insisted on the need for continuous dialogue between investors and the countries that receive investments from SWFs.
Tectonic shift
"There is a tectonic shift in economic activity from North to South. ADIA has been operating for 35 years and we understand the current concerns and changes that are happening," Villain said.
"Our goal is to rebuild trust with the various players of the market through different actions," he said, adding that the agency works closely with the government of Singapore in establishing policy principles of cooperation as proposed by the US Department of Treasury and co-chairs the IMF working group on sovereign wealth funds.
Sherani said SWFs are "an important element of stability as we have a long-term vision, we also invest where nobody else does, including US real estate."
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