Monetary Union in the Gulf: Prospects for a Single Currency in the Arabian Peninsula

by Rutledge; Emilie

• ISBN13: 9780415459426
• ISBN10: 0415459427
• Edition: 1st
• Format: Hardcover
• Copyright: 2008-10-13
• Publisher: Routledge

Summary

At a time of momentous shifts in the balance of world economic forces epitomized by the current oil price boom, the weakening US dollar and the global credit crunch; the meteoric rise of the Arabian peninsula cannot be understated. Neither, therefore, can their planned monetary union. As key suppliers of the world's oil and gas the Gulf states have accumulated vast wealth: taken together their sovereign wealth funds are by far the world's largest and the influence of these funds is becoming increasingly apparent. This book provides a thorough analysis of the scheduled 2010 monetary union. Its findings are based on both primary research and a detailed empirical analysis of the region's economies spanning 1980-2006. It assesses the region against Optimal Currency Area criteria, the European Criteria, highlights outstanding preparations and considers the underlying economic and political factors that may aid or indeed delay the launch date. Critically this book argues that the present dollar-peg exchange rate regimes are no longer optimal. The future Gulf dinar is likely to seek a more independent path. The ramifications of this - a potential Islamic anchor currency and an alternative oil-invoicing currency - are also considered in some detail.

Author Biography

Emilie J. Rutledge is Assistant Professor of Economics at the United Arab Emirates National University.

Table of Contents

List of figures	p. ix
List of tables	p. x
Foreword	p. xi
Acknowledgements	p. xiv
List of abbreviations	p. xv
Introduction	p. 1
The present conjuncture	p. 3
The choice of model	p. 4
Regional monetary precedents and problems	p. 5
The 2001 Economic Agreement and after	p. 6
Outline of the study	p. 9
Characteristics of the GCC economies	p. 11
Resource riches: the dominance of oil	p. 13
Economic performance	p. 16
Key economic challenges	p. 30
Is the GCC an optimal currency area?	p. 35
The development of OCA theory	p. 36
Intra regional trade	p. 37
Labour market mobility	p. 42
Capital market integration	p. 45
Economic diversification	p. 51
Economic synchronization	p. 55
To what extent is the GCC an OCA?	p. 58
Policy prerequisites for GCC monetary union	p. 60
Institutional preparations	p. 61
Fiscal and monetary convergence	p. 65
Preparing the private sector	p. 72
Political commitment and motivation	p. 74
Are the European criteria being addressed?	p. 77
Potential costs of GCC monetary union	p. 79
Relinquishing independent monetary policy	p. 80
Harmonizing differing national economic strategies	p. 83
Fiscal convergence criteria	p. 86
Political 'costs'	p. 87
Potential benefits of GCC monetary union	p. 92
Economic benefits	p. 94
Associated benefits	p. 103
Prospects for GCC monetary union - a preliminary balance sheet	p. 106
Is the GCC an OCA (and does this matter?)	p. 107
Policy prerequisites for monetary union	p. 110
Potential costs of GCC monetary union	p. 111
Potential benefits of GCC monetary union	p. 113
Future issues and controversies	p. 117
What sort of currency?	p. 118
Geopolitical implications	p. 122
The immediate outlook	p. 124
Notes	p. 126
Bibliography	p. 128
Index	p. 138
Table of Contents provided by Ingram. All Rights Reserved.