This paper will explore the issue of regional currency unification in the gulf countries. The paper affirms that unification of gulf currency may boost economic efficiency, further economic integration and develop a non-oil economy in the region. The paper further notes that currency unification should not be seen as the only component of the much wider integration efforts…
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In the recent past, the world has witnessed an increasing interest in economic integration and currency unification among countries in specific regions. The idea of currency unification is not new and can be dated back to 1961 when Mundell coined the concept of Optimum Currency Areas (OCA) as noted by . Currency unification has been one of the key ambitions of the Gulf Cooperation council (GCC) countries. Soon after the formation of GCC, the region’s goal for the formation of unified currency system was adopted in the article 22 of the council’s unified economic agreement of June 1982, which states that:
“The member states shall seek to coordinate their financial, monetary, and banking policies and enhance cooperation between monetary agencies and central bank, including an attempt tom establish a common currency in order tom further their desired economic integration” .
assert that the European economic and monetary union (EMU) model of 1999 which set the pace for the adoption of Euro by eleven countries as well as the continuing efforts by the GCC member states to integrate their economies have contributed to raise this ambition a new.
It is worth noting at this point that the remarkable convergence of the exchange rate policies adhered in the GCC countries pegs to the US dollar. In accordance to exchange rate arrangement formally reported to the IMF, only the rial Oman is pegged to the dollar.
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(The Issue of Regional Currency Unification Essay - 3)
“The Issue of Regional Currency Unification Essay - 3”, n.d. https://studentshare.org/macro-microeconomics/1418253-the-issue-of-regional-currency-unification.
It is not commonly known, however, that some eleven years before this treaty, in 1981 the Gulf Cooperation Council formally articulated its objective to seek to establish a single, unified currency for the six member states in this region. Originally scheduled for adoption in 2010, the adoption date was postponed because of the destabilization caused by the intervening financial crisis and the economic recession.
The role of Euro as a major currency with its significant influence in the world economy has acted as a launching pad for the discussions with reference to the introduction of regional currency unification by the various regions for the benefit of the international trade and economic development.
If the currency is unified, there is not the ability to autonomously change the peg or exchange rates within each country, and this has proved to be a problem for the GCC countries. Specifically, Kuwait has pegged its currency to a basket, while Oman has indicated that it needs more time before it is ready to commit to the unified currency.
rding to Looney (2003), defense of the region was the original objective of the GCC, as it was formed in response to the instability of the region that was the result of the Iran-Iraq war.4 Therefore, according to Looney, the first concern of the GCC was security, while economics was secondary.
This process of unifying European currency started back in the aftermath of World War II and progressed gradually for over 60 years. Critics were so skeptical on the Europe’s idea of monetary unification claiming that Europe was not close to optimal monetary union.
This literature review would examine the theoretical and conceptual constructs of currency hedging strategies and their relevance or irrelevance to all firms in a highly competitive and risk prone money market.
In the first instance currency hedging practices have their relative individual significance vis--vis non-currency investment opportunities and net returns on such investment vehicles (Zarin, & Zimmerman, 2006).
d consequent financial rise, internal and external policies and the courageous steps taken by the dynamic leadership of Prussian leaders, that the disintegrated states of Prussia witnessed the magnificent incident of unification after winning series of three historic wars
PRO: The countries in the GCC area are principally involved in the export of oil, and command more than half of the world’s known oil reserves. This high dependence on one industry presents a risky situation for these countries; the creation of
Among the notable economic decisions made by both domestic and international economies are dollarization and the formation of monetary unions (Douma & Schreuder, 2008). These two are uniquely different in relation to the purposes they
Informal currency union refers to the one-sided espousal of foreign currency while formal currency union refers to the embracing a foreign currency on merit of multilateral or bilateral concurrence with the offering authority. Formal with
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