Regional Initiative in the Gulf Arab States: The Search for a Common Currency

Basher Syed Abul

MPRA Paper from University Library of Munich, Germany

Abstract: While many commentators have been openly critical of China's currency policy on the basis of an undervalued renminbi, despite a similar surge in GCC's (Gulf Cooperation Council) balance of payment surpluses in the first decade of this century, the vast majority of the commentators have maintained a stony silence on the undervalued Gulf currencies. This underscores the geopolitics of currencies as a form of asymmetric warfare and the consequences of dollar, euro or renminbi diplomacy. This paper makes two main additions to the literature on Gulf monetary union. First, it emphasizes that the creation of a fiscal union is necessary for the Gulf monetary union to succeed. Second, it proposes some alternatives to pegging to the dollar, which would allow the GCC to absorb large swings in global commodity prices (oil, food) in the short to medium run. The proposed exchange rate regimes are not conditional on the formation of the Gulf monetary union, and can be implemented individually or collectively.

Keywords: Fixed exchange rate; Currency basket; Fiscal union; Monetary union; Gulf Cooperation Council. (search for similar items in EconPapers)
JEL-codes: E52 F36 F4 (search for similar items in EconPapers)
Date: 2013-04-23
New Economics Papers: this item is included in nep-ara, nep-mac, nep-mon and nep-opm
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https://mpra.ub.uni-muenchen.de/46486/1/MPRA_paper_46486.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/65902/9/MPRA_paper_65902.pdf revised version (application/pdf)

Related works:
Journal Article: Regional initiative in the Gulf Arab States: the search for a common currency (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:46486

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