MANAMA // Gulf states should not be deterred from monetary union by the financial turmoil in Greece, says Sheikh Mohammed bin Essa Al Khalifa, the chief executive of the Economic Development Board of Bahrain. Speaking at the opening of the inaugural Bahrain Global Forum, organised by the International Institute for Strategic Studies (IISS), Sheikh Mohammed said monetary union should not be derailed by the problems in Greece and the decline of the euro.
"Currency union gives us control of our monetary policy, which is de facto run by the Fed [US Federal Reserve]," he said. "It is still a long-term goal and the concept is still in our sights, but we are watching as the euro goes through a crisis. What we need in the Gulf is a currency with sound fundamentals." Central bank governors from Saudi Arabia, Kuwait, Qatar and Bahrain started official talks to push forward the GCC monetary union in March. The UAE and Oman have opted out.
"Monetary union does not necessarily need political union," said Richard Cooper, the Maurits C Boas professor of International Economics at Harvard University. "There are examples in the Caribbean and Africa where it has worked well. I see no obstacle to it in the Gulf." Dr John Chipman, the director general and chief executive of the IISS, said there was a new international world order. "It is proper to host such a debate in the middle of where economic change is taking place," Dr Chapman said. "What better place to hold it than the original financial centre of the Gulf?"
Themes under discussion this week include ways of managing global economic governance and how countries might diversify their economies. rwright@thenational.ae
