JEDDAH, 31 May 2007 — According to Bahraini finance minister, Sheikh Ahmed ibn Mohammed Al-Khalifa, the finalization of the draft proposal for a GCC unified currency will be completed soon. GCC central bank officials are expected to meet at the end of June to decide the name of the new currency, its types and the way it will be introduced as well as the mechanisms of exchange to be utilized. Ahmed said that plans to introduce the unified GCC currency by January 2010 are going according to schedule despite Oman’s failure to fulfill certain criteria. He added that the GCC countries are trying to bridge financial gaps in order to launch the currency on schedule, with member countries already agreeing on issues related to inflation, bank interest rates, and budget surpluses and deficits.
The chief economist at SABB, John Sfakianakis said, “I think that the possibility of the GCC states meeting the deadline of January 2010 for the introduction of the unified currency is still possible. There are, however, signs that some countries are not meeting the criteria concerning the deadline and I fee that Saudi Arabia, as the largest economy in the GCC, should be the leader and show its strength in order for the deadline to be met.”
When asked if the adoption of a unified currency would cause an increase in the cost of living as was the case in the EU when the euro was adopted, Sfakianakis said, “Not necessarily as in some major ways, we in the Gulf already have a common currency since local currencies are often accepted across borders. A unified GCC currency should not lead to speculation resulting in a rise in the cost of living.”
