Description

The GCC economies are major crude oil and natural gas producers. Level of monetary convergence in the GCC quantified by low inflation levels, low interest variations, and stable exchange rate regime makes it suitable for the monetary union. While Bahrain, Kuwait, Qatar, and Saudi Arabia are in agreement to form the GMU by 2013, Oman and the UAE are not to be its part. With the objective of monetary integration and a common currency ‘Khaleeji’, GMU nations are focusing on complete integration of product and factor markets that enables exclusion of transaction costs and uncertainties associated with existence of separate currencies. Monetary integration removes all obstacles in the movement of goods, services, capital, and labor.