In their different ways, China and the European Union have much to teach the Gulf Co-operation Council countries. But, when it comes to currencies, China is the example to follow and Europe the one to avoid.
While currency reform is not on the agenda, a gradual introduction of flexibility into GCC currency regimes is desirable since it would allow some control over monetary policy. Because of the dollar pegs adopted by five of the six GCC states, monetary policy is entirely dependent on the US.
What is on the agenda is currency union. But flexibility makes better economic sense.
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