Gulf leaders set to discuss common currency

CURRENCY TALKS: Gulf leaders will meet next week to discuss the future of their currencies. (Getty Images)

Gulf Arab policymakers are set to decide next week on the location of a regional central bank and could choose to streamline the ratification process for a monetary union deal, a senior Gulf official said.

Five of six oil-producing Gulf Cooperation Council (GCC) states have this year put fresh impetus behind efforts to create a common currency, agreeing in June to set up the nucleus of a joint central bank - a monetary council - in 2009.

Under the current plan, the monetary council would be established one month after all Gulf governments have ratified the monetary union agreement, said Naser al-Kaud, deputy assistant secretary-general at the GCC Secretariat-General.

Gulf central bank governors and finance ministers will study a proposal on Sept. 17 to get the council started after three states ratify the deal, he said.

"What we are trying now is to make it less than five, maybe three, so as to establish the monetary council as soon as possible," Kaud told Reuters in an interview late on Sunday.

Central bank chiefs, set to meet for two days before their joint meeting with finance ministers, will also put the "final touches" on the monetary union deal and the council's charter.

"The location of the monetary council will be decided at the joint meeting and they will recommend it to Gulf leaders," Kaud said, adding there were "no specific proposals" on the site.

Among the monetary council's responsibilities will be to determine the conversion rate of each national currency against the common currency - a step that is likely to happen before 2010, he said.

"If we are not able to issue the physical currency we will have the accounting unit and the name. Then we can have a transitional period before we issue the currency," Kaud said.

"I think that is the least we can do to meet that deadline."

Any decisions made at next week's meetings in the Red Sea port city of Jeddah would have to be approved by Gulf leaders at their annual summit in Omani capital Muscat this November. (Reuters)

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