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The notion of establishing a common currency across the six nations of the Gulf Cooperation Council (GCC) is part of a much bigger, overall plan for economic union of the GCC. The GCC already has a common customs duty in relation to the rest of the world, and is moving towards a common market. To this end, barriers to investment within the GCC have been dropped and GCC Nationals can work in any of the member nations.
Part and parcel of a common market is reducing other barriers to the movement of capital, one of which is payments and currencies. For 30 to 40 years, the GCC nations have all been effectively pegged to the US dollar, which essentially means they are already in a quasi monetary union. So, the next obvious question is 'why should we have Riyals, Dinars. Dirham etc, why don't we just have one?'
A single GCC currency would lower the cost of transactions, it would also means you're dealing with one market and everything is quoted in one price, this would allow more efficient trading and - most importantly I think in the case of the GCC - it would mean that the financial markets would become more integrated. That is the big prize for the GCC countries.
STRATEGIC BENEFITS
A common Gulf currency, let's call it the Khaleeji, could be traded internationally, it...