Introduction In 2001, the Heads of State of the Gulf Cooperation Council (GCC) decided that the bloc would embark on the establishment of a Gulf Monetary Union (GMU). The basic assumption was that the GMU would be created in the style of the Economic and Monetary Union (EMU) established by the European Union (EU) towards the end of the last and beginning of this century.

The legal basis for the GCC initiative was laid down in Article 4 of the 2001 Economic Agreement, which states the following:

“For the purpose of achieving a monetary and economic union between Member States, including currency unification, Member States shall undertake, according to a specified timetable, to achieve the requirements of this union. These include the achievement of a high level of harmonization between Member States in all economic policies, especially fiscal and economic policies, banking legislation, setting criteria to approximate rates of economic performance related to fiscal and monetary stability, such as rates of budgetary deficit, indebtedness, and price levels.”

By the end of 2009, another legal act relating to GMU entered into force: a Monetary Union Agreement (MUA), inclusive of the Statute of a Gulf Monetary

Council (GMC). It is noted that the MUA has not been signed by Oman and the United Arab Emirates. Oman is of the opinion that it has to invest in the development of its infrastructure first and will thus for the time being not meet the convergence criteria for participation in the monetary union. The UAE has reconsidered its participation in GMU after the GCC's decision to locate the headquarters of the GMC in Riyadh, Saudi Arabia, rather than in the UAE capital, Abu Dhabi. The MUA foresees that this set of legal instruments will be completed with the Statute of a Gulf Central Bank (GCB), which will have to be prepared by the GMC.

In March 2010, the GMC was inaugurated. Its main task is to prepare for GMU and it will no doubt wish to look into the EU's experiences in this respect. While the EU may indeed provide for many useful examples, which may save valuable time for the GCC, a word of caution is warranted as well. EMU is embedded in the institutional framework of the EU, which has developed over a period of more than five decades.