The General Cooperation Council formed in May 25, 1981, according to Nugée and subacchi (2008). It is a union concerned more of political and economic objectives. It is composed of six Arab states situated along the Persian Gulf. These states include Bahrain, Kuwait, Oman, Saudi Arabia, United Arab Emirates (UAE) and Qatar. This union was formed with the mind of achieving a myriad of objectives among them the establishment of a common currency. This meant that the states of the union had to decide on the currency to use, which had to be the only currency in circulation in the states. Hence, that objective of having a common currency resulted in a suggestion of the formation of the Central Bank of Gulf Cooperation Council (Nugée & subacchi, 2008).
The central bank of GCC was to be formed by the six states but unfortunately two states, in particular, Oman and United Arab Emirates, did not join in the central bank formation. Those two states had reasons for not joining in the council. Therefore, the central bank of GCC is a composition of Bahrain, Qatar, Saudi Arabia and Kuwait. The four states formed the common monetary union and a precursor to a Gulf Central Bank, in the march of 2010 (Nugée & subacchi, 2008)....
In short, it was up to achieving equality. The common currency adopted by the union was called Khaleeji. The currency was turned down by the sates that then resorted to one called Dinar (Muslemani, 1996). Qualification criterion However, for the states to qualify as member of the union, it was paramount that certain qualifications were met by the countries. The qualifications were six, and failure by any state to meet even one qualification rendered it not qualified as member of the union. The first one was that the inflation rate of any of the countries was not to exceed 2%. Banks (2006) argues that the 2% was the weighted average of inflation in Gulf Cooperation Council. According to Banks (2006) it was agreed that the inflation rate was not to exceed 8.91% for countries willing to participate in the union. Unfortunately, countries like Qatar and UAE exceeded the limit. Secondly, it was a requirement that the average short run rates of interest were to be maintained at an average of at least three rates of interest added to 2% in every member of the union (Banks, 2006). The third element was that preserves of across border exchange were to account for goods to be imported for a time of not less than four months. This qualification was met by all the countries of the unification. This could be attributed to the large oil preserves present in the member countries. The fourth requirement was that it was compulsory for the countries to meet the public debt criterion. According to Filho and Filho, (2003) it was evident that all the member countries qualified, where no country’s ratios were above 60% of the Gross Domestic Product for the common state and 70% of gross domestic