1. Introduction

The main purpose behind the formation of the GCC in early 1980s is still being realized even three decades after its inception. There has been considerable progress in the synchronization of the financial markets and mobility of commodities and factors of production through the member states of the council, namely Saudi Arabia, Kuwait, Qatar, United Arab Emirates, Oman and Bahrain. But the main achievement of the GCC would be the establishment of the monetary union which was the main purpose of the council in 1981 rendering the determination of the external anchor which is dominantly assumed to be the US dollar. The most recent developments have made the dollar questionable to fix the common currency. Indeed, when and if accomplished the common currency of the GCC is going to be the second currency after the Euro on the basis of the total GDP belonging to the group, besides there are serious discussions about the survival of the Euro after the current financial crisis which is developing into a sovereign debt crisis. One main advantage of the GCC in establishing the same currency area is the homogeneity of the countries in terms of their common history, language and thereby culture as well as the structure of the economies behind them which are much weaker in the EU countries.

The GCC states have enjoyed the extra returns of increased oil prices especially in the last decade as the result of their consistent and constant policies in a complex region. Besides, the emphasis of the GCC countries on non-oil economy has increased due to diversification. As such, the United Arab Emirates have exported considerable amounts of non-oil products. Indeed, the GCC countries have almost all conditions ready for the common currency and thus all states but Kuwait have pegged their currencies to the US Dollar since 2003 whereas the common market was initiated in 2008. They are prudent enough to establish and preserve financial and macroeconomic as well as political stability. But still the feasibility of adopting a common currency should be elaborated since the states will have to surrender their independent authorities should a common currency be adopted and the Central Bank for that currency be established. It would be a painful experience to try but fail as is being experienced by the EU.