GCC Currency in 2010: Al-Assaf

JEDDAH, 29 March 2005 — The six-member Gulf Cooperation Council countries are committed to issue the GCC common currency in the year 2010, Finance Minister Dr. Ibrahim Al-Assaf stated yesterday. He denied press reports that the new currency has been named Gulf dinar. “We have not yet finalized the name of the currency as to whether it be Gulf dinar or riyal or any other name,” Al-Hayat Arabic daily quoted the minister as saying.

According to a study, the new currency will be the world’s most important currency union after the euro.

The GCC currency will have far-reaching implications, including a big boost to inter-GCC trade, and could help the region’s countries diversify their economic base away from hydrocarbons, said the study prepared by the Dubai-based Gulf Research Center (GRC).

“The relevance of the currency is not only because it will be the single currency of an economic bloc that has a GDP of $388 billion and controls 45 percent of the world’s known oil reserves, but also because currency unions invariably increase the levels of intraregional trade,” it said.

Once established, the GCC leadership may decide to invoice their hydrocarbon sales in the new common currency, moving away from the current dollar pricing system. It could also become the reserve currency of choice for Islamic and Arab central banks for a combination of religious and political reasons.

Al-Assaf also disclosed that GCC finance ministers would meet in Riyadh on Sunday to discuss important topics including GCC’s negotiations with the European Union. “We will discuss ways to remove the obstacles confronting GCC-EU talks to conclude a trade agreement,” he said.

The Saudi minister was speaking to reporters after attending a ceremony organized by the Jeddah-based Islamic Development Bank to mark its 30th anniversary. He refused to describe the US-Bahrain talks to establish free-trade zone as a crisis. However, he pointed out that the Riyadh meeting would discuss the matter among other topics.

Al-Assaf said Saudi Arabia has proposed to renew the term of Dr. Ahmed Muhammad Ali, president of IDB, for another five years. “We have presented a proposal officially last week to Malaysian Prime Minister Abdullah Badawi, current chairman of the Organization of the Islamic Conference,” he said. IDB governors meeting, scheduled to be held in Malaysia after three months, will take a final decision on the issue.