Kuwait backs Gulf currency - then asks for delay

Gulf Currency

Kuwait have reiterated its support for a common Gulf currency focused on stabilising Gulf economies.

However, the Kuwaiti government has also called for the project's launch - set for 2010 - to be delayed so it could address "technical issues." Kuwait, Saudi Arabia, Qatar and Bahrain signed an accord in June to create a joint monetary union council as a prelude to a Gulf central bank.

This is set to be followed by the launch of a single currency, but organisers have expressed concern over the "optimistic" target date.

Despite the fact that the United Arab Emirates and Oman withdrew from the project earlier this year, Kuwait have continued to back the project. In a statement, Kuwait's finance ministry said, "once it is put in place, the project would lead to shoring up the purchasing power of the single currency and to boosting the negotiating position of the GCC member countries versus world economic organizations and blocs."

The Kuwaiti cabinet only recently approved the Gulf agreement regulating the single Gulf currency project, and has referred it to the National Assembly parliament for further deliberations and approval.

The UAE objected to the Saudi capital Riyadh being chosen to host the future central bank, and said it would be keeping its own currency, the dirham, which would remain pegged to the dollar. Meanwhile Oman said it was not ready to meet the preconditions.

Much like the idea behind the euro, a single Gulf currency will be focused on facilitating business transactions in the region and stabilising the economy in general. The Gulf's tourist industry is also expected to benefit, as visiting travellers can deal with a single currency when moving between member states.

The deadline of January 1, 2010, was earmarked at the GCC's 22nd session on December 22, 2001.

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