FACTBOX-What next for the Gulf Arab monetary union?

The four countries, which are still going on with the project are Saudi Arabia, Kuwait, Qatar and Bahrain.

Following are a few facts on what to expect next:

RATIFICATION

* The ratification process is complete with the four countries that are going ahead with the monetary union project finalising the deal ahead of this week's Gulf rulers' summit in Kuwait. [ID:nGEE5B70CA]

MONETARY POLICY

* Formation of a monetary council is expected to be announced during the GCC rulers' summit on Dec. 14-16.

* The Riyadh-based council will craft the joint monetary policy until the common central bank is established.

* The council should enable the monetary union partners to align their monetary policies in terms of currency, payment and settlement systems, reserves and budgetary procedures.

CURRENCY

* Gulf officials are generally in favour of adopting a U.S. dollar peg for the new single currency despite recent comments from individual countries that all options are open.

* Analysts say the members may go with the greenback peg initially to ensure a smooth transition as inflation remains well below last year's record highs despite the dollar weakness.

* Kuwait said the currency peg is a technical issue that may not be discussed during the summit.

* A future change of the foreign exchange regime is not ruled out.

* Kuwait is the only Gulf Arab country that abandoned the dollar peg in the past due to soaring inflation, linking its dinar to a currency basket in 2007.

HURDLES

* The dominance of Saudi Arabia, the top Arab economy and the world's largest oil exporter. Saudi Arabia's economy now accounts for nearly 63 percent of the currency union's gross domestic product.

* While the kingdom will be instrumental in driving the integration process, it's difficult to see an equal relationship with smaller states.

* Analysts have said the union was also hampered by lack of democratic accountability of rulers with fragile egos who jealously guard territories carved out in colonial times.

FUTURE TIMELINE

* In March 2009, the Gulf Cooperation Council (GCC) countries abandoned a 2010 target for issuing common notes and coins.

* The policymakers have said a new deadline could only be set after the monetary council starts operating.

* Kuwait has said a single currency may take up to 10 years.

* With a list of technical difficulties ahead and as some say hopes that the UAE would return to the pact, the monetary union is expected to proceed at a slow pace.END