Pegging to the dollar and the feasibility of the proposed currency area in the GCC

Abstract

The aim of this paper is to examine the general progress of Gulf Cooperation Council (GCC) in moving towards economic integration, as part of their proposed currency union in 2010. It also aims at analyzing the expected impact of the new currency in the GCC on the financial markets in the region. It also analyzes the trade-offs associated with the move to the planned currency area with special emphasis on the stability of the banking and financial systems in GCC economies and recommends conditions and specific policy measures that would capitalize on the European experience and provide optimal benefits from the proposed union.