Riyadh: Plans by four GCC states to launch a single currency could be delayed by four to five years from the intended date of January 2010, according to a banking report.
The delay was attributed to several handicaps, including divergence of views among GCC states on a number of issues pertaining to the unified currency, said the report released by Banque Saudi Fransi.
The bank report said a single currency is expected to encourage further trade and financial integration, facilitate foreign direct investment, and foster the development of the GCC into an optimum currency area.
Ratification
The report, titled Long way ahead for the GCC unified currency, and prepared by Saudi Fransi's chief economist John Sfakianakis, noted that the four GCC states, Saudi Arabia, Kuwait, Qatar and Bahrain, which agreed to go ahead with the single currency plan, have to complete ratification of the monetary union deal before the next annual summit of GCC rulers slated for December.
Saudi Arabia was the first GCC state to ratify the deal while the other three states are expected to do so in the coming months. Once the ratification process is complete, the four countries will establish a monetary council.
"In our view, momentum behind the project is still weak and we believe it could take four to five years before a single currency comes into circulation," Sfakianakis said, noting that the "divergence of views among GCC states" is a key factor holding back currency union.
