For Oman, Gulf Monetary Union is about the marking to market of the gold reserves of the GCC states by the Gulf Monetary Authority / Gulf Monetary Council.

I am already revisiting the question of Oman and the Gulf Monetary Union (GMU)
which I discussed today in
Fundamental Economic Implications of GMU
September 16th, 2008 by Ivo Cerckel
http://bphouse.com/honest_money/2008/09/16/fundamental-economic-implications-of-gmu/

This was December 2006:

Oman ‘will not join Gulf monetary union in 2010’ Discuss
10/Dec/2006
Reuters
http://www.gulfbase.com/site/interface/NewsArchiveDetails.aspx?n=33973
SNIP
Oman has informed the other GCC states that it will not be joining the proposed monetary union on the planned date in 2010, a Gulf official said yesterday as the leaders of the Gulf countries gathered here for a summit meeting.
UNSNIP

But, this is September 2008:

GCC inches towards Gulf Central bank
Web posted at: 9/16/2008 3:43:58
AFP
http://www.thepeninsulaqatar.com/Display_news.asp?section=Business_News&subsection=Local+Business&month=September2008&file=Business_News2008091634358.xml
SNIPS
Decisions by the ministers and governors become effective only if approved at a summit of GCC leaders due to be held in OMAN toward year’s end.
+
Setting up a monetary council is seen as an important step forward on the road to monetary integration between the GCC states, but the self-imposed target date of 2010 to launch a SINGLE CURRENCY appears unrealistic.
+
Oman, however, has pulled out of plans to adopt a SINGLE CURRENCY.
“They feel they are not going to be ready by 2010 … Rather than delay the process, they want the other countries to move ahead, and they can join at a later date,” said the official, who asked not to be named.
UNSNIP

Ivo:
So there’s a meeting in November 2008 in Muscat, Oman, setting up the GMU.

Oman will not participate in the single currency, but will host the meeting setting up the GMU.

CONCLUSION:
Oman will participate in the GMU, although not in the single currency.

Or will the GMU be extraterritorially set up?,
that is,
Will the GMU be set up outside of the GMU?,
that is,
Will the GMU be set up in Muscat, whereas Oman would not be a member of the GMU?

It seems to me that it would be difficult to answer those questions affirmatively.

What is that GMU?

As I said earlier today in the post quoted at the outset of this post:

For Oman, GMU is not about a single currency.

For Oman, GMU is only about marking the GMU’s gold reserves to market (marking to market – MTM) by the Gulf Monetary Authority (GMA) or Gulf Monetary Council (GMC) which should come into being before the Gulf Central Bank (GCB) comes into being. The GCB should then issue the Khaleej Dinar.

The final sentence of the following snip says that the GMA/GMC could possibly manage the gold reserves of the GCC states.

Tough competition for central bank headquarters
14/09/2008 12:06:11 PM GMT
http://www.islamonline.com/news/newsfull.php?newid=161315
SNIP
GMA STRUCTURE AND POWERS
The Gulf Monetary Authority will have little or no formal power in the conduct of monetary policy. Rather, it would: – Run in parallel with national central banks, which would retain control over national monetary policy setting, currency issuance, and financial market regulation. – Involve a decision-making council, probably comprising governors of the national central banks. Key decisions are likely to be made by a unanimous vote and probably each country’s vote would carry equal weight. – Aim to strengthen co-operation between national central banks and national monetary policies, including policy recommendations and promoting both macroeconomic convergence and exchange rate stability. It could also play an important and sensitive role in assessing the degree of economic and financial convergence amongst the GCC GCC states. – Make preparations for the introduction of a single currency. – Possibly manage a proportion of the $150bn (Dh551bn) gold and
foreign exchange reserves of the states. UNSNIP

So Oman will pool its gold reserves with those of the 5 other GCC members.

And the GMA/GMC will mark these reserves to market.

That’s FreeGold.

That’s why the GMU can legally be set up in Muscat – without the Khaleej Dinar.

ivocerckel@siquijor.ws

A “Lehman’s lessons” Lex-column, published on 15 September 2008 at 09:27, in the Financial Times (FT),  blames Lehman Brothers’ bankruptcy on too much leverage in the financial system.

Leverage is any arrangement (such as a margin purchase or an option contract) that exaggerates the effect of any change in the price of the underlying investment. By analogy, volatility.

By arguing that the nature of that collateral has changed dramatically since the US central bank, the Federal Reserve, or Fed, started throwing lifelines to investment banks, the FT’s “Fed up? Not yet” Lex-column, published on 15 September 2008 at 15:05, implicitly recognises that the dollar has no collateral whatsoever. The gold reserves of the US Treasury, formerly of the Fed, at Fort Knox are empty.

In its “Downgrades deepen AIG woes”-article, published on 15 September 2008 at 19:01, the FT nevertheless argues that AIG, the troubled insurer that sits at the heart of the financial system, on Monday had its key credit ratings cut, potentially triggering billions of dollars of collateral payments on its many derivatives trades.

Collateral is an asset that is pledged for a loan, to be sold for the benefit of the lender if repayment is not made.

How can a dollar paper note which has no collateral constitute a collateral payment?

The FT’s “Wall Street banks fight for life”-article, published on 14 September 2008 at 23:48, says that the world’s top banks appeared close to abandoning efforts to save Lehman and set out to build a “firewall” against further financial chaos with a $50bn liquidity pool to support other vulnerable institutions.

A firewall between the collateral and the underlying investment prevents leverage.

How can the take-over of Lehman’s competitors, like Merrill Lynch, by other banks constitute a firewall for these other banks?

That’s why the new monetary system which is being built up by the Gulf Monetary Union (GMU) and the European Central Bank (ECB)) will naturally employ a gold component and a paper component, but will put a “firewall” between the two such that gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies.

With their gold assets regularly marked to market, the eurogulf-system seems well on the way to replace the dollar as the world reserve currency.

The bankruptcy of Lehman Brothers is due to the fact that the dollar is a worthless piece of paper.

With FreeGold it’s up to you to decide what you do with your individual wealth, either you entrust it to the fraudulent fiat-system from which Lehman Brothers and its competitors could take so much advantage since the early seventies when US president Richard Nixon broke the Bretton Woods system, or you invest it in internationally freely floating gold.

ivocerckel@siquijor.ws