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GCC sinGle CurenCy - to be or not to be !

So the after EU's Euro we are now going to have GU's (Gulf Union) GINAR (GCC Dinar). Not a new revelation but surly an interesting development in the making. The GCC has agreed on it and the IMF has given their blessings, "The establishment of an economic and monetary union will create an important regional entity that in 2001 had an estimated combined GDP of about $335 billion, average weighted per capita income in nominal terms of $12,708, and 45 and 17 percent, respectively, of the world's oil and natural gas reserves."(IMF's F & D Mag)

So lets see a single currency eliminates intra-transaction costs but each of the currency being pegged to dollar there are no noticable costs. Single currency also facilitates internal trade but that is not substantial. So unless the countries start putting faith in their own people, their own industry and their own entrepreneurs there is no value to the Ginar. I wonder if the poilcy makers are worried who will have the tallest building to be featured on the 500 bank note?

Dollar is backed by only one thing; oil and gas trade. Despite the biggest federal debt of $8 trillion the country is still maintaining a strong currency. So unless the GCC will start billing oil in their Ginar there is no possibility of this becoming a strong currency: and that I dont think will happen, unless the single currency still stays under Uncle Sam's umbrella.

But yes if the single currency lays low and starts focusing on local industries and businesses it might be a good idea. Local businesses can expand regionally more easily. So for a businesses based in Dubai the markets of Muscat would be fair game, three hours drive and easy payment methods. Not only would a single bank notes help the structure but also the need of single visa and ease to register business branches across the region. Thus complete economic cooperation and homogenity. I think that would make GCC quiet an investment magnet and give the entrepreneurs free choice across the region.

14th September 2006 so I wonder if its happening by 2010.

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