The GCC Monetary Union; Some Considerations for the Exchange Rate Regime
We compare the dollar peg to a dollar-euro basket peg as alternative exchange rate regimes for the incipient Gulf Cooperation Council (GCC) currency union. Quantitative evidence suggests basket peg does not dominate dollar peg for improving external stability. However, as GCC exports and external financial assets become more diversified, a more flexible exchange policy may be necessary for competitiveness and stability. Pegging the prospective common GCC currency to a basket, like the dollar-euro basket, may provide a conservative transitional strategy toward a more flexible exchange rate policy.
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- David Brodsky & Gary Sampson, 1984. "The sources of exchange rate instability in developing countries: Dollar, french Franc and SDR pegging countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 120(1), pages 133-154, March.
- Williamson, John, 1993. "Exchange Rate Management," Economic Journal, Royal Economic Society, vol. 103(416), pages 188-97, January.
- Stefan E. Oppers, 2000. "Dual Currency Boards; A Proposal for Currency Stability," IMF Working Papers 00/199, International Monetary Fund.
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