Honest Money

… even though the GCC single currency may take a little longer

Oman will definitely participate in the GMU.

Nadim Kawach reports in the Friday 28 November 2008 editions of Emirates Business 24/7 that, according to Washington-based Institute of International Finance (IIF), the Gulf Co-operation Council (GCC) is unlikely to accomplish a landmark Gulf Monetary Union (GMU) on time given the present high inflation levels and the need for more fiscal agreements. (1)

Oman said in December 2006 that it would not join GMU in 2010. (2)

In September 2008, Oman said that it had pulled out of plans to adopt a “single currency”. (3)

On Tuesday 25 November 2008, at a Muscat, Oman, meeting of GCC finance and foreign ministers to hammer out a final statement for leaders to sign at the Muscat 29 and 30 December 2008 GCC Summit,
HE Abdul Malik al-Hinai, undersecretary of economic affairs at Oman’s economy ministry, said that
the objective of the GCC central bank under the agreement is to maintain price stability in the “single currency” area within the framework of optimal utilisation of economic resources with the aim of maintaining economic stability. (4)

So there’s a meeting on 29 and 30 December 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?

HE Abdul Malik al-Hinai meant “GMU area” when he said on Tuesday 25 November 2008 that the objective of the GCC central bank under the agreement is to maintain price stability in the “single currency area” within the framework of optimal utilisation of economic resources with the aim of maintaining economic stability.

Maintaining price stability in the GMU area within the framework of optimal utilisation of economic resources, as envisaged by HE Abdul Malik al-Hinai, means marking the GCC oil, gas, and gold reserves to market (price). This marking to market of these reserves will display that the GCC economy and its participants are not fraudulent.

Once this decision is taken, the decision can be implemented within minutes.

Ivo Cerckel

NOTES

(1)
Monetary union ‘needs time’
By Nadim Kawach on Friday, November 28, 2008
http://www.business24-7.ae/articles/2008/11/pages/11282008_9b4064e631ba4852ae3794a074df0d5a.aspx
SNIP
Gulf oil producers are unlikely to accomplish a landmark monetary union on time given the present high inflation levels and the need for more fiscal agreements, according to a key Western financial centre.

The six Gulf Co-operation Council (GCC) states, which control nearly 45 per cent of the world’s proven oil resources, also need to agree on a new currency peg but adopting a more flexible basket needs time to be enforced, the Washington-based Institute of International Finance (IIF) said.

(2)
Oman ‘will not join Gulf monetary union in 2010’
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.

(3)
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.

(4)
Planned GCC central bank to be independent entity
Reuters on Wednesday, November 26, 2008
http://www.business24-7.ae/articles/2008/11/pages/11262008_d94063285efe4d1ea734dde110af358e.aspx
SNIP
“The objective of the central bank under the agreement is to maintain price stability in the single currency area within the framework of optimal utilisation of economic resources with the aim of maintaining economic stability,” the official said.

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