The countries of the Gulf Cooperation Council (GCC) are considering launching their own common currency to reduce their dependence on the US dollar. This initiative is part of a wider movement to challenge the greenback’s dominance on the international stage.
What is the GCC?
The GCC was created in June 1981 by six oil-producing countries: Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman. For the first time since its creation, the GDP of the GCC countries exceeded $3,000 billion in May 2023. According to the World Bank, this GDP could reach 13,000 billion dollars in the next 20 years, making the GCC a major economic player.
GCC plans for a common currency
According to Saudi Arabia’s Minister of Economy and Planning, Mohammed Al-Jasser, the GCC plans to set up a unified central bank and a common currency. The new currency could be pegged to an exclusive basket of currencies, the IMF’s Special Drawing Rights (SDRs) or the US dollar, to ease the transition. This project aims to strengthen the economic and financial integration of GCC member countries.
The advantages of a common currency
According to Al-Jasser, this common currency would eliminate currency conversion costs for intra-regional transactions and reduce the disruption caused by exchange rate fluctuations. This would help boost trade within the GCC. What’s more, this currency would replace the US dollar and strengthen the region’s financial sector. It would also offer greater economic and political stability in the face of outside influences.
