The GCC Monetary Union : Some Considerations for the Exchange Rate Regime

Author/Editor:

Behrouz Guerami ; S. Nuri Erbas ; George T. Abed

Publication Date:

April 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 03/66

Subject:

English

Publication Date:

April 1, 2003

ISBN/ISSN:

9781451848816/1018-5941

Stock No:

WPIEA0662003

Format:

Paper

Pages:

25

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