The issue of regional currency unification - Essay Example

In the recent past, the world has witnessed an increasing interest in economic integration and currency unification among countries in specific regions. The idea of currency unification is not new and can be dated back to 1961 when Mundell coined the concept of Optimum Currency Areas (OCA) as noted by . Currency unification has been one of the key ambitions of the Gulf Cooperation council (GCC) countries. Soon after the formation of GCC, the region’s goal for the formation of unified currency system was adopted in the article 22 of the council’s unified economic agreement of June 1982, which states that: “The member states shall seek to coordinate their financial, monetary, and banking policies and enhance cooperation between monetary agencies and central bank, including an attempt tom establish a common currency in order tom further their desired economic integration” .

assert that the European economic and monetary union (EMU) model of 1999 which set the pace for the adoption of Euro by eleven countries as well as the continuing efforts by the GCC member states to integrate their economies have contributed to raise this ambition a new. It is worth noting at this point that the remarkable convergence of the exchange rate policies adhered in the GCC countries pegs to the US dollar. In accordance to exchange rate arrangement formally reported to the IMF, only the rial Oman is pegged to the dollar.