JEDDAH, Sept 17: Finance chiefs of oil-rich Gulf states on Wednesday approved proposals to set up a monetary council and a draft charter for a monetary union, the Arab bloc’s secretary-general said.

Finance and economy ministers of the six-member Gulf Cooperation Council approved the draft agreement for a monetary union and the council’s bylaws at a meeting in Jeddah, Abdurrahman al-Attiyah told AFP.

The endorsement of the proposals constitutes a major step towards adopting a long-sought single currency, Attiyah said.

The monetary council, agreed in principle by GCC central bank governors in 2006, would be the forerunner for a GCC central bank, which will issue the single currency.

But there is doubt about whether the GCC can meet its 2010 target date for a single currency.

The decisions taken by the ministers on Wednesday will be referred as recommendations to GCC heads of state when they hold their annual summit in Oman later this year, Attiyah said.

They must be approved by the heads of state before they come in force for the GCC, which groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Attiyah said the ministers had decided to defer a decision on the location of the monetary council until they discuss the issue with Gulf foreign ministers at a joint meeting in the Omani capital Muscat on Oct 26.

The finance and economy ministers also reviewed the European Union’s response to the GCC’s view on obstacles hampering a long-stalled free trade agreement between the two blocs, Attiyah said.

They will brief Gulf foreign ministers during the Oct 26 meeting, “and a final decision will be taken regarding the continuation of negotiations” on the elusive deal, which has been under discussion for two decades, he added.

Although senior Gulf monetary officials have openly conceded that a 2010 launch of the single currency is not possible because of technical, legislative and fiscal hurdles, GCC leaders at their annual summit last year decided to stick to the target date.

Oman, however, has pulled out of plans to adopt a single currency.—AFP