The Gulf Cooperation Council (GCC) will not introduce a common currency before its members have a clear common objective and act in harmony, an official of the European Central Bank (ECB) said here on Monday.
At the opening of the four-day global financial summit SIBOS, Yves Mersch said that no union of states would be ready for a common currency if there was no political consensus.
The six GCC member states, Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman and Bahrain, have been discussing a currency union similar to the 17-member euro zone since the end of the 1990s but the idea has not yet been materialized.
"When you share a common currency you have to share sovereignty and that requires a harmonization of political processes and fiscal policies in the member states," said Mersch, an executive board member of the ECB.
The ECB banker added that the GCC should not rush for a common currency as long as they cannot guarantee this mutual solidarity.
"The global financial crisis in 2008 demonstrated that markets do not correct themselves, and that policy makers must act swiftly to prevent the financial system from falling deeper in times of a severe crisis," he said.
In May 2007, Kuwait dropped the pegging of its currency to the U.S. dollar without consulting the other GCC members, a move which was widely regarded as an evidence that the Gulf states were not ready to share sovereignty.
Two years later, a dispute between the UAE and Saudi Arabia arose when the 11th GCC Consultative Summit decided to choose the Saudi capital of Riyadh as the location of a future GCC central bank.
The GCC, founded in 1981, has set several "deadlines" in the last decade to introduce the Khaleeji, the new money, but they were all missed. A new deadline for a common GCC currency has yet to be set since 2009, but the plan for the common currency has never been called off.