Four members of the six-member Gulf Cooperation Council (GCC) – Saudi Arabia, Qatar, Bahrain and Kuwait – Sunday signed an agreement paving the way for a monetary union and pressing ahead with plans for a unified regional currency. Foreign Minister Prince Saud Al-Faisal signed the pact at the Conferences Palace in Riyadh on behalf of the Kingdom. The signing ceremony was attended by Prince Muqrin Bin Abdul Aziz, Chief of General Intelligence, Abdul Rahman Al-Attiya, GCC Secretary General, finance ministers of the member countries in the Gulf Monetary Union and the governors of the central banks in the member countries. Al-Attiya announced that the Gulf single currency – whose name is yet to be decided – would be pegged to the dollar. The monetary union agreement has 28 Articles, specifying the characteristics and features of the unified currency and lays down a general outline for monetary institutions and their functions and responsibilities, said Al-Attiya in a statement after the signing ceremony. The agreement also outlines the relationship between monetary union institutions and national central banks as well as legal and legislative responsibilities of the member countries. The agreement specifies the functions of the Central Bank by drawing and implementing the single currency monetary policy, including the exchange rate, administering foreign exchange reserves for the unified currency, the issuance of banknotes and coins of different denominations of the single currency. Al-Attiya praised the measures taken by the member countries toward ratifying the agreement, which is expected to be competed by the end of 2009, according to the directives of the GCC Supreme Council. He confirmed that work was in progress for the establishment of the Monetary Council. He expressed his hope that the UAE and Oman would join the four Gulf countries which signed the agreement and participate with them in achieving the aspirations of the leaders of the GCC to reach economic integration. The GCC secretary general said the step reflects the determination of the member countries to forge ahead in achieving monetary union. It prepares a strong groundwork for the legal and legislative system necessary for the monetary union, forms an important starting point for building the institutions of the monetary union represented by the monetary council and central bank, he said. Dr. Ibrahim Bin Abdul Aziz Al-Assaf, Minister of Finance, described the signing of the monetary union agreement and the regulation for the Gulf Monetary Council as an important stage in the march of GCC economic integration. “For us in the Kingdom of Saudi Arabia the procedures are going on. God willing, the agreement would be approved and ratified as planned. The Council of Ministers has approved it. What remains is procedures for referring it to the Shoura Council, which will discuss it and then return it to the Council of Ministers for final ratification and issuing of a Royal decree,” he said. “This is good news,” said John Sfakianakis, chief economist with SABB, the HSBC Holdings PLC affiliate formerly known as Saudi British Bank. “This is going to keep momentum going forward. Much remains to be done, but one should not forget that much was done already.” “This is a good indication that the remaining states will move ahead,” said Sfakianakis. “And what needs to be done is for the ... (GCC) states outside the monetary union to realize the benefits of being in the union.” “It is a milestone,” said Ihsan al Bu-Hulaiga, chairman of investment bank Watan Investment. “With other currencies emerging, the GCC stands a chance to be independent of other currencies.”
