The GCC Monetary Union

Download or read book The GCC Monetary Union written by Mr.S. Nuri Erbas and published by International Monetary Fund. This book was released on 2003-04-01 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: We compare the dollar peg to a dollar-euro basket peg as alternative exchange rate regimes for the incipient Gulf Cooperation Council (GCC) currency union. Quantitative evidence suggests basket peg does not dominate dollar peg for improving external stability. However, as GCC exports and external financial assets become more diversified, a more flexible exchange policy may be necessary for competitiveness and stability. Pegging the prospective common GCC currency to a basket, like the dollar-euro basket, may provide a conservative transitional strategy toward a more flexible exchange rate policy.