The monetary union plans of the GCC countries
The Gulf Cooperation Council (GCC) was founded in 1981 and currently consists of Kuwait, Qatar, Bahrain, Saudi Arabia, Oman and UEA. In 2001, the member states of the GCC decided that they aimed to set up a customs union by 2003, a common market by 2007 and a monetary union with a single central bank and a common currency by 2010.
Discuss the following questions in your paper (do not simply answer the questions but create a smooth story line):
1. Discuss the preparatory steps that GCC countries have already taken to set up the monetary union;
2. Explain the theory of optimum currency areas;
3. Use the theory of optimum currency areas to evaluate whether the GCC countries form an OCA;
4. Evaluate the costs and benefits that may be expected of the establishment of the GCC monetary union;
5. Formulate policy recommendations for the governments of GCC countries.