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GCC to introduce common currency on time in 2010
The common currency of the Gulf Cooperation Council is expected to be issued on schedule on January 1, 2010, according to a senior UAE government official.
- By Ahmad Ameen, Staff Reporter
- Published: 00:00 September 10, 2006
- Image Credit:
- "We have discussed a draft monetary agreement based on the draft agreement that was provided by the European Central Bank." - Sultan Bin Nasser Al Suwaidi, governor of the UAE Central Bank
Abu Dhabi: The common currency of the Gulf Cooperation Council is expected to be issued on schedule on January 1, 2010, according to a senior UAE government official.
"The GCC Committee of Governors of Monetary Agencies and Central Banks have agreed on important issues during its 41st meeting, including the framework of the proposed common monetary authority, or the GCC's central bank, and its relationship with the individual central banks, as well as payment systems and the suggested reserves," said Sultan Bin Nasser Al Suwaidi, governor of the UAE Central Bank. "We have discussed a draft monetary agreement based on the draft agreement that was provided by the European Central Bank (ECB), which included the general guidelines."
The draft is to specify the institutional nature of the new authority and its functions. The draft will be subject to the approval of the GCC's leaders at the next summit, scheduled to meet by the end of 2006.
Peg
He expected the new common currency to be pegged to a single currency, but he declined to speculate. He also said that pegging to a basket or current would not be efficient.
"Our studies have shown that pegging to a basket of currencies will eventually end up with the domination of a single currency," he said. "However, such pegging will take place only at the outset, as the trend is to float the new currency given the appropriate timing."
"The ECB's draft did not specify or recommend the level of foreign currency reserves required, and for the time being only the existing reserves are being considered till the time when each member country provides its assessment by the end of October, for the purpose of reaching to a common agreement in this respect as well as the general outline of the new authority and its functions," Al Suwaidi said.
The committee held its meeting in Abu Dhabi yesterday and was attended by the GCC's assistant secretary general for economic affairs, Mohammad Al Mazroei, who said there is a specific timeframe set for the technical committees, "whereas issues such as issuance, denominations, design, reserves, and a draft agreement for the new monetary authority are being finalised."
The new authority is expected to assume issues currently dealt with by the committee as well as the Monetary Union Unit at the general secretariat of the GCC. The issues under consideration include inflation, interest rates, adequacy of reserves, as well as the ratio of annual deficit of the member countries.
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