Say that the central bank enhances oil price stability and economic efficiency in the region while those who argue against it argue that it may be influenced by political pressure and the independence of national central banks will be affected. The report also suggests that the main objective of the GCB is to achieve price stability, economic stability and economic efficiency while its function is to implement monetary policies.
GCC is an economic integration of six countries that have come together for easy exchange and trade among each other. The six country members of the GCC include: Bahrain, United Arab Emirates, Oman, Kuwait, Saudi Arabia and Qatar. The members of the integration have benefited a lot from the integration through reduced barriers of trade and good diplomatic and economic relationships with other members of the union. GCC Monetary union has been one of the key objectives of the GCC members since 1980s (Lycett et al, 1984). Towards the goal of monetary union, the members have encouraged regional integration and intraregional movement of goods, services, technology and capital.
As a way of encouraging the development of the monetary union, some member countries have suggested the introduction of a common currency that can be used as a common means of exchange among all countries just like the Euro used in the European Union. The need for one currency then called for a common monetary policy implementation in the gulf region. Because monetary policy is the work of a central bank, the Gulf Cooperation Council suggested the formation of a central bank of the union. The central bank would implement the monetary policy of the union and issue a common currency for all member countries to use for exchange amongst each other.
This project report highlights the structure of this proposed central bank of the GCC and explains some of the similarities and differences between it and the Central Bank of the EU.