The Gulf Cooperation Council consists of six Arab countries along the Arabian Gulf. It comprises Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, and the United Arab Emirates. The countries share many historical and cultural ties and hope to develop more diversified intra-Union trade in future. There has been an urge for greater union since the 1980’s. In 2000, plans were implemented in an attempt to devise a monetary union and work towards achieving its objectives. The initial step undertaken by these countries was to peg their currencies to the U.S. dollar as a way of creating a common currency. As the Gulf countries are known for production of oil, the choice to peg their currencies reflects heavy earnings of dollars.
There has been discrimination and hidden charges when undertaking currency conversion. The western countries understand that the Asian countries are endowed with resources and their earnings are high. The charges imposed during currency conversion were above the normal charges taxed to other developing countries. United Gulf currency aimed at minimizing these stringent conditions pressed on the Arab countries’ currency. Indeed, such initiative became successful immediately after its implementation, but later the European countries started to posit challenge, as it was the immediate market for their products. Therefore, the Arab Countries are facing a dilemma on whether to continue its implementation as some of the economists argue that it has both negative and positive implications to the profitability of these countries.
- To determine the strengths and weaknesses of applying GCC Currency by the Arab countries through comparison with the Euro currency
- To determine the strength associated with GCC currency application in the economy
- To explore the currency’s implications on the current and future oil market trend
- To determine the drawbacks associated with GCC currency application as compared to Euro currency