Four Gulf countries locked in plans to set up the Middle East’s first monetary union should set a deadline for the launch of their single currency, a Saudi parliament member was quoted as saying on Monday.
Saudi Arabia, Kuwait, Qatar and Bahrain, members of the six-nation Gulf Co-operation Council (GCC), also need to learn from the recent euro crisis but must not wait until the crisis is over, said Ihsan bu Hlaiga, Saudi Shura (appointed parliament) member and a well-known Gulf economist.
Quoted by Saudi newspapers, bu Hlaiga said the central bank governors of the four members should double efforts to launch the Gulf Central Bank (GCB), which will replace the Gulf Monetary Council they created early this year.
“There is a challenge facing the GCC monetary union project at present… the agreement was definite and clear as it set a start and an end to this important project before creating a common currency,” he said.
“For this reason, the central bank governors should make clear the date for the start and the end as well as the stages through which the project will pass before the launching of the common currency…they should start work in order to pave the way for the creation of the GCC central bank.”
The four members have not set a date for the launch of the single currency nor have they specified the type of that currency. But some officials have noted such a plan would take time while others have spoken of a period of five years.
The monetary union, which was launched at the start of 2010 following several years of negotiations, received a blow when the UAE announced two years ago that it was quitting.
Oman, a smaller GCC economy, also said it would not join the monetary union for the time being, citing internal circumstances.
Hlaiga said the creation of a single currency would allow members to face economic problems as was the case with Greece’s debt crisis.
“GCC countries cannot ignore the eurozone crisis…they should contemplate and analyze this experience but this must not mean a halt to the project,” he said.
“The crisis has proved that a monetary union is the only outlet for countries with merged economies to overcome problems…without support from the eurozone members, Greece could have resorted to the International Monetary Fund and submitted to tough and complicated terms…for this reason, I believe that the GCC monetary union will contribute to economic stability in member states not only in times of prosperity but also during crises.”