Google+ Followers

Sunday, 15 March 2009

Kuwait may opt out of monetary union for now

Kuwait may join Oman to opt out of the GCC monetary union next year and both the countries could join the union later, a senior economist close to the matter said.

Jarmo T Kotilaine, Chief Economist of Bahrain-based NCB Capital Fund (a subsidiary of National Commercial Bank of Saudi Arabia), said the decision to form a monetary union and introducing a common currency is now hinged on two questions. First being the name of the common currency. And second, where will the central bank be located? "For all that we know, discussions are currently being carried out on these issues. All the GCC countries are lobbying to have the central bank located on their soil," Kotilaine said.

Oman and Kuwait have had divergent views with regards to the GCC union. While Oman has been reluctant to accept a common currency, Kuwait has de-pegged its currency to the dollar (to which all the GCC currencies are pegged) and has pegged it to a basket of currencies. "Other GCC countries may therefore go ahead and form a union. These two countries may join later," said Kotilaine, who has been researching on the monetary union and had also published a report on it.