A currency worthy of the Gulf economy!

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Years ago, I had a conversation with one of the monetary officials in the Gulf states about the unified Gulf currency. He believed that there was no need for a unified currency as long as the Gulf currencies were linked to the dollar and enjoyed a high degree of stability among themselves. This sentence has stayed with me ever since. Today, this sentence is back to the forefront, but with greater intensity than ever before, especially in light of the transformations witnessed by the Gulf economy and the global economic system.

It is certain that the Gulf Cooperation Council countries are close to the state of a “semi-monetary union,” as a result of the stability of their inter-rater exchange rates and the peg of most of their currencies to the dollar. In other words, the Gulf countries have already come part of the way towards monetary union, without reaching its final stage. Today, the Gulf economies are moving toward greater diversification, their financial markets are expanding, their cross-border investments are increasing, and their ambition to become global centers for capital, trade, and technology is growing. The time has come to complete this journey, and transform the existing monetary similarity into a common economic and financial force.

The importance of the Gulf currency today should not be measured only by the exchange rate or monetary policy. The Gulf states themselves are no longer the economies they were when the idea of ​​a unified currency was proposed decades ago. Current Gulf economic visions all aim, to varying degrees, to diversify sources of growth, deepen financial markets, increase the role of the private sector, attract foreign investment, develop financial, logistical and technical services, and reduce dependence on oil. Here the single currency becomes part of a larger economic structure, and not just a unified means of payment.

The gains of the Gulf Monetary Union go beyond the idea of ​​removing the risks of exchange rate fluctuations between the GCC countries, and extend to deepening the integration between the stock, bond and money markets, raising the efficiency of financial services, and contributing to the development of non-oil sectors. Here in particular, the importance of this movement is more important at the present stage than ever before.

Imagine a Gulf financial market that moves within a single monetary space, in which companies and governments can issue debt instruments in a common currency, and the investor deals with a broader and more liquid market, in which some transaction costs and risks associated with multiple currencies are reduced. Then the currency is no longer just a symbol of Gulf integration, but rather a financial infrastructure that can serve the economic transformation that the Gulf countries are spending hundreds of billions to achieve.

The matter does not stop at the Gulf borders. Geopolitical tensions, the increasing use of financial instruments in international conflicts, the accumulation of gold in central banks, and attempts to develop new payment and settlement systems have all brought back to the fore the relationship between currency and economic sovereignty, especially in a world where currency has become part of the tools of economic power. The Gulf countries' possession of increasing economic and financial weight in capital, energy markets, and global investments also calls for building a monetary force that reflects this weight.