RTTNews - The UAE withdrew from the proposed monetary union agreement between the states of the Gulf Co-operation Council or GCC, state news agency WAM reported Wednesday citing an official at the Foreign Ministry. At the same time, Kuwait and other Gulf countries are still part of the plan.

The GCC, formed in 1981, includes Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman. In 2001, the six states agreed to form a monetary union and to adopt a single currency by 2010. Oman opted out of the process at the end of 2006. The UAE is the second country to pull out of the project.

The exit of the UAE following Oman is a major blow for the EU-style single currency plan.

WAM quoted governor of the UAE Central Bank, Sultan Nasser Al Suwaidi, saying that the UAE will continue to maintain its expansionary monetary policy, without change, and that, therefore, it will maintain its the exchange rate of the UAE dirhams' exchange rate pegged to the US dollar. As part of the monetary union plan, Kuwait had abandoned its peg to the dollar in 2007.

The UAE has expressed reservations over the decision to locate the central bank in the Saudi Arabian capital Riyadh. The WAM reported that the UAE was the first country to officially request, in 2004, the hosting of the planned central bank.

The country does not currently host any organization or body affiliated with the Gulf Co-operation Council, the report said.

For comments and feedback: contact editorial@rttnews.com