There is no necessity for a single GCC currency, although it will certainly make life easier for businesses and tourists as they travel around the region, by removing the cost of exchanging currencies.
There is a downside for governments, with the independence to set monetary policy taken away. Yet five of the six GCC members rarely lose an opportunity to emphasise their support for the idea. It is the political rather than the economic momentum that is keeping the project going, and why the sceptics who doubt whether a currency will ever materialise are likely to be proved wrong.
Unfortunately for the currency’s supporters, there is little sign of hurry from the governments. A 2010 deadline will come and go without any new notes or coins making their way into Gulf wallets.
Before a single currency does arrive, the GCC states will have to decide whether it should inherit their existing currencies’ dollar pegs. The new currency would be a relative minnow on the world stage and might be unable to go it alone entirely. A currency basket would give it greater flexibility.
But the practical issues of the design of the notes and coins, the location of a common central bank and who will lead it are likely to provoke far more heated arguments.
While GCC governments procrastinate, their economies are getting harder to manage. Inflation is rising sharply, bringing with it the chance of greater economic volatility. If the upcoming meeting in Riyadh does bring about a downturn in oil prices it might help, but other hard decisions will have to be made on government spending if inflation is to be tamed.
The decision by central bank governors this month to push only for a monetary council to be introduced by 2010, rather than the currency itself, was both sensible and realistic. Given the current economic climate, delaying the introduction of a single currency until their economies have settled down makes sense.