Bringing down the dominance of the U.S. dollar seems to be more popular than expected. The BRICS nations have been tirelessly working towards it. Joining the bandwagon, the Gulf Cooperation Council (GCC) has also been thinking about rolling out its very own common currency while limiting the use of the US dollar.
What is GCC?
The GCC was established back in June 1981 by six oil-producing nations. This includes Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. For the first time since its founding, the GDP of the GCC countries surpassed $3 trillion in May 2023. In addition, a World Bank official was reported by Arab News as stating that the GDP of the GCC countries may reach $13 trillion in the next 20 years. Thus, the agency has the potential to meddle with the dominance of the U.S. dollar. Saudi’s Minister of Economy and Planning Muhammed Al-Jasser even stated,
“The task of this organization is to establish a united central bank and common currency.”
More recently, these nations have joined forces to provide the GCC Grand Tours visa. This is similar to the EU’s Schengen visa in that it allows travel to several countries in the area.
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Exploring GCC’s Common Currency
In a note penned down by Muhammed Al-Jasser, he notes that the new currency may be pegged to an exclusive currency basket, the SDR, or the US dollar. The currency will mostly be pegged to the U.S. dollar during the interim. This is to ease the process of transition during later days. The name or the exchange rate of the currency is yet to be decided.
Speaking about the benefits of this currency, the minister wrote,
“It will eliminate the currency conversion costs involved in intraregional transactions and remove the disturbances in relative prices arising from nominal exchange rate fluctuations. The lowering of transaction costs and removal of exchange rate uncertainty will contribute to raising intraregional trade, to which GCC countries attach considerable importance.”
In addition, the new currency rather than the US Dollar would also boost the financial sector through the GCC. It would bring about common monetary policy among the member countries.
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