With its oil and gold reserves freely floating in the background, the Gulf Single Currency will also freely float and the market will determine interest rates.

Meanwhile Gulf Central Banks are buying gold.

Gulf central banks look to gold as uncertainty rises
By Cleofe Maceda, Staff Reporter
Published: October 07, 2008, 23:26 http://www.gulfnews.com/business/Commodities/10250412.html
SNIP
Dubai: Central banks in the Gulf and elsewhere in the world will likely turn to gold as the global banking crisis boosts the metal s appeal as a buffer against dire economic conditions, industry sources said on Tuesday.

(Note how this article given a nice description of the wealth value of gold.)

The GCC (Gulf Co-operation Council) Single Currency will therefore
not be pegged to a basket of currencies
but will freely float
with its gold and oil reserves also freely floating in the background.

This article in today s Emirates Business 24/7
Basket of currencies best option for GCC
Wednesday, 08 October 2008
http://www.business24-7.ae/articles/2008/10/pages/10082008_4d3 980c26cab48c19a1a278f67f302e7.aspx

quotes a report arguing that a move to a free float can be ruled out at present as the region lacks a well-developed debt market that helps transmit interest rate signals.

Yes, that s why the GCC will not elaborate a debt-based monetary system,
but a wealth(gold)-based monetary system
whereby the market does not respond to interest rate signals
but whereby the market determines interest rates.

By the same token, every increase in the price of gold and/or oil will lead to an increase in the value of the GCC Single Currency.

ivocerckel@siquijor.ws