Regional monetary integration in the member states of the Gulf Cooperation Council

Michael Sturm and Nikolaus Siegfried

No 31, Occasional Paper Series from European Central Bank

Abstract: The Gulf Cooperation Council (GCC) plans to introduce a single currency by 2010 in its six member states, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. This paper focuses on selected macroeconomic and institutional issues and key policy choices which are likely to arise during the process of monetary integration. The main findings are that (i) a supranational GCC monetary institution is required to conduct a single monetary and exchange rate policy geared to economic, monetary and financial conditions in the monetary union as a whole; (ii) GCC member states have already achieved a remarkable degree of monetary convergence, but fiscal convergence remains a challenge and needs to be supported by an appropriate fiscal policy framework; and (iii) there is currently a high degree of structural convergence, although this is expected to diminish in view of the process of diversification in GCC economies, which calls for adequate policy responses. JEL Classification: E5, E52

Keywords: Gulf Cooperation Council; member states; monetary integration; monetary policy (search for similar items in EconPapers)
Date: 2005-06
Note: 493824
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (93)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbops:200531

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