Abstract
US Dollar (USD) is the most dominant currency encompassing 59.54% of the world reserve currency. Euro is the second one, which holds 20.57% share of world reserve currency. The recent studies reveal that the USD might not be the dominant world reserve currency in the future. Euro as a common regional currency is the only competitor of USD, which shows the strength of a unified regional currency. In 1981, the six rich oil states formed Gulf Cooperative Council (GCC); the countries include the Kingdom of Saudi Arabia, the State of Qatar, the Sultanate of Oman, the Kingdom of Bahrain, the State of Kuwait, and the United Arab Emirates. This establishment of GCC signifies the close cultural, economic and political link between the GCC countries. GCC countries have almost all essential ingredients required to establish a common currency area or monetary union. The researcher applied the European Monetary Union (EMU) model to GCC states to find out the feasibility of a common currency or monetary union between GCC states. Currently, EMU is the only example of successful implementation of common regional currency founded on Mundell’s theory of Optimum Currency Area (OCA). The results obtained indicate that all the GCC states successfully fulfill the Euro criteria which are also called Maastricht criteria. The research has established that GCC countries are ripe for establishing a monetary union, especially if they follow the steps of EMU.
Highlights
History of money and currency is closely associated with the history of civilizations
The results indicate that Gulf Cooperative Council (GCC) states are adequately seasoned to form a common currency or monetary union
It was proved that all the GCC states successfully fulfill the Maastricht Criteria, which is the basis of European Monetary Union (EMU) formation
Summary
History of money and currency is closely associated with the history of civilizations. After the formation and effectiveness of the EU, over time, the European countries reached the establishment of monetary union. They signed the Maastricht Treaty in 1991 and agreed to form the monetary union, which led to the formation of the Euro currency as one of the strong competitors of the USD. GCC aims to bring the citizens of all countries closer and establish more collaboration towards the economy, trade, finance, administration, legislation, agriculture, etc To achieve these objectives, the GCC Supreme Council has set many milestones such as: 1) The free export and import of industrial, agricultural, and natural resource products among GCC member states. Section four elaborates the Exchange rate mechanism for the proposed common currency, and section five concludes the findings
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