Gulf states approve regulations of monetary system, common currency
Gulf, Economics, 3/21/2005

The governors of monetary and central banks establishments in the Gulf Cooperation Council (GCC) approved regulations regarding monetary founding a monetary union and a common currency by the beginning of 2010.

The participants who met in the Saudi capital Riyadh approved criterion on interests rate, monetary reserves and deficit levels in the budget and the government's general debt levels.

The assistant secretary general for economic affairs at the GCC, Muhammad al-Mazrou'i, said that the governors of the central banks in Saudi Arabia, Oman, Bahrain, Qatar, Kuwait and the UAE agreed to keep the government's debt level at less than 60% of the GNP.

He added that they also put limits on inflation, interest rates, foreign reserves and the budget deficit, but have not yet reached a final decision over the authorities of a new regional central bank.

The GCC official described the results of the talks which took place on Saturday as an important development adding that the GCC finance ministers will discuss the agreement in May.

The economies of the GCC members states are very similar and implemented a customs unity. The GCC member states intends to establish a common market by the fall of 2007 and unify its dollar-linked currency three years after that.

The hopes to achieve monetary unity by the fall of 2010 are surrounded by fears of certain central banks of giving up authority for a regional authority and the instability of oil prices because of great changes in the economics which depend on crude oil.

However, the UAE which proposed hosting the GCC's central bank in future expected in 2004 that the GCC member states will float the new currency a short time after launching it and to give up linking it up to the US dollar.

Previous Stories:
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  Washington announces the beginning of trade negotiations with UAE, Oman   (2/18/2005)
  Accelerating the process of free trade negotiations between Gulf states, Pakistan   (2/12/2005)
  Gulf states discusses currency unification before 2010   (12/11/2003)
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