Gulf dinar to be set at SR10
Posted by Ivo Cerckel on June 19th, 2009
The Gulf dinar is to be issued by the Gulf Central Bank and set at Saudi riyal 10, nearly $2.66.
It is important to notice that the issuing “price”, the exchange rate of or at issue, will be set in Saudi riyal, not in US dollar.
Yes, at the moment of issuing the Gulf dinar, the Saudi riyal may still be pegged to the US dollar.
But the article which follows does not say that the Gulf dinar will remain pegged to the US dollar.
Ivo Cerckel
honestmoney@maktoob.com
Gulf dinar ‘to replace four local currencies’
AFP on Friday, June 19, 2009
http://www.business24-7.ae/Articles/2009/6/Pages/18062009/06192009_31063656473f4a46a5a0f83e06203d68.aspx
SNIP
Four Gulf oil producers planning monetary union are expected to name a new common currency the Gulf dinar, a Saudi academic said yesterday.
And the new currency will run in tandem with national coins and notes now in circulation to ease the transition, he said.
Wadei Ahmed Kably, economics professor at the King Abdul Aziz University in the Saudi Red Sea Port of Jeddah, said he expected the Gulf dinar to be issued by the Gulf Central Bank and set at SR10, nearly $2.66.
“Based on the European Union experience, I expect the new currency to be circulated along with the existing national currencies in the Gulf Cooperation Council,” he told the Saudi Arabic language daily Al Watan.
“Both currencies will remain in circulation by banks and individuals for one or two years so the public get used to the new currency. National currencies could then be gradually withdrawn within five years so the public will not feel any difference,” he told the paper.
No related posts.
June 21st, 2009 at 10:07
I am very happy with the way I phrased my reaction under the following article. I take the liberty (what liberty? this is my blog and that was my reaction) to copy it here.
GCC set for oil windfall as prices rise -GS
Jun 19, 2009 at 07:07
http://business.maktoob.com/20090000005719/GCC_set_for_oil_windfall_as_prices_rise_GS/Article.htm
SNIP
Gulf Cooperation Council (GCC) countries and Russia could enjoy large windfalls if oil prices rose to as much as $63 per barrel this year and $90 next year, Goldman Sachs analysts said, adding they saw brighter prospects for the Gulf Arab nations when compared with Russia. UNSNIP
Reaction
Ivo Cerckel
Jun 19, 2009 at 09:19
Of course, do not expect Goldman Sachs to argue that oil should be priced in Honest Money. How could there then possibly be any demand for that worthless piece of paper, called the US dollar?
What is the use for the GCC of higher US dollar oil prices if the paper, the US dollar, received as payment for oil wealth has first to be converted into real wealth before the GCC can be sure that the payment received will not lose most its value?
So the GCC exchanges its oil wealth for something of no value whatsoever. Yes, Goldman Sachs is happy, but why is the GCC so happy to give its oil wealth away for something of no value?
Is the GCC sure it will always continue to be able to convert these worthless pieces of paper, called the US dollar, into tangible wealth?
June 21st, 2009 at 11:59
My question in my Maktoob reaction was:
Is the GCC sure it will always continue to be able to convert these worthless pieces of paper, called the US dollar, into tangible wealth?
THEREFORE
the finance ministers and the central bank governors of the four prospective Gulf Monetary Union (GMU) members will meet in Muscat, Oman, in late September. (1)
Oman will however not participate in GMU?
Why are the four prospective GMU members then meeting there?
As I said 9 months ago on this blog
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 [Gulf] Dinar. (2)
THEREFORE
although GMU will be launched in 2010, officials have said the issuance of the Gulf dinar could be delayed beyond that period. (1)
Ivo Cerckel
honestmoney@maktoob.com
NOTES
(1)
Central banks to halt lending as part of union
By Staff Writer on Sunday, June 21, 2009
http://www.business24-7.ae/Articles/2009/6/Pages/20062009/06212009_b75ab650e80c4b93917474d3e9cb0297.aspx
SNIP
Gulf central banks will halt their lending operations in line with an agreement signed by four regional states to launch the world’s second monetary union in the oil-rich Gulf, a Saudi newspaper reported yesterday.
Alriyadh Arabic language daily published the text of what it said was the draft statute of the planned Gulf Monetary Council (GMC), which will pave the way for the creation of the joint Gulf Central Bank (GCB) just after the launch of the monetary union by four Gulf Co-operation Council (GCC) members.
The finance ministers and the central bank governors of the four signatories – Saudi Arabia, Kuwait, Qatar and Bahrain – will meet in the Omani capital, Muscat, in late September to approve the final draft statute and present it to the next annual GCC summit before the end of 2009, the newspaper said in a report from Riyadh, where both the GMC and GCB will be headquartered.
+
The UAE and Oman, also GCC members, have pulled out of the monetary union, whose signatories have pledged to launch in 2010. But officials have said the issuance of a joint currency could be delayed beyond that period.
(2)
For Oman, GMU is MTM of gold reserves by GMA/GMC
Posted by Ivo Cerckel on 16th September 2008
http://bphouse.com/honest_money/2008/09/16/
[If the link does not work, try to copy it and to paste it in your browser]
SNIP
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