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Gulf Common Currency Pegged to Basket Feasible by 2020: EIU

“The GCC countries will peg their common currency to a trade-weighted basket of currencies by 2020, although one or two states may opt out of this initiative,” the Economic Intelligence Unit said in its 2020 outlook report.”

Most of our interviewees thought it feasible that the GCC would have monetary union by 2020, though 
not by 2010.”

Gulf Cooperation Council members Saudi Arabia, the UAE, Kuwait, Bahrain and Qatar agreed in December to a 2010 deadline for monetary union.

The countries have yet to decide on a location of a central bank 
and convergence criteria.

Bahrain central bank Governor Rasheed Al Maraj said last week the 2010 deadline would have to be revisited. “Assuming that oil is still being traded in dollars in 2020, a GCC currency basket is likely to be heavily weighted toward the dollar, as is already the case in Kuwait,” the EIU said.

The GCC economy is expected to grow to $2 trillion by 2020, providing nearly one-quarter of the world’s oil and an increasing amount of petrochemicals, metals and plastics, the EIU said.