MONETARY UNION IN GULF COOPERATION COUNCIL COUNTRIES: A CLOSER LOOK IN ITS FEASIBILITY

Abstract

This paper reviews the previous studies done to analyze the effectiveness of monetary union. History of monetary union is discussed to show how it started, its use, the cost of creating it, the different kinds of monetary union, as well as the benefits related to its implementation. The stages that European undertook in creating its own monetary union was also discussed to show the different steps that member countries need to take in order to establish a monetary union. Moreover, the data surrounding the feasibility of creating a monetary union among GCC countries is also explored. By comparing business cycles as well as other economic indicators among GCC countries, this paper reveals that it can be a challenge for all GCC countries to integrate their economies to create a single monetary policy and align their fiscal policies before establishing a monetary union. Nonetheless, there are many other factors that contribute to the success of monetary union in GCC countries that decision makers in the region need to consider before finally establishing their own monetary union.