The oil-rich Gulf Cooperation Council took a major step towards a single currency union on Sunday when four members signed a pact to create a joint monetary council after years of hesitation.
Foreign ministers from Bahrain, Kuwait, Qatar and Saudi Arabia agreed at a Riyadh meeting to set up the council, a precursor to the ultimate goal of establishing a common currency, a spokesman for the grouping said.
Foreign ministers from Oman and the United Arab Emirates also attended the meeting but refused to sign on.
Oman announced in 2007 that it wanted to keep an independent monetary policy, while the United Arab Emirates, a key regional financial and commercial hub, pulled out last month, annoyed that the GCC decided to base the future regional central bank in Riyadh.
The absence of the two -- especially UAE, the Gulf bloc's second largest economy -- left a shadow over the landmark event.
But GCC officials said quietly that they hoped that when preparations were more advanced, that the two countries would decide to join.
The four signatories embrace a relatively small population of nearly 33 million.
But with huge oil and gas reserves, hydrocarbon processing industries, and growing financial sectors, the four collectively had an outsized gross domestic product of 764 billion dollars in 2008.
Saudi Arabia, which will host the eventual GCC central bank, dominates the region based on its role as OPEC's largest oil exporter and its holding the world's largest proven oil reserves.
The ministers gave little information on how the move toward currency union will proceed after their meeting, and made no predictions on the target date for creating a common currency.
In a brief statement, the GCC ministers said they expected the agreement would be ratified by the member states by the end of this year.
"The main target of the monetary union is to achieve price stability," the statement said.
The signing came after years of hesitant moves on the idea. Full monetary union was originally set for 2010 but analysts consider that unrealistic given the global economic slowdown. Reports suggest that 2013 is the new target.
Analysts also saw the UAE's decision to drop out was a major blow to the vision.
With its strong growth in finance, trade and tourism, a population of 4.8 million and GDP at 270 billion dollars last year, the UAE would be crucial to the success of any regional currency.
But analysts and banks still called the signing significant.
"It is a milestone," said Ihsan al Bu-Hulaiga, chairman of investment bank Watan Investment.
"The current crisis will leave a different monetary landscape ... With other currencies emerging, the GCC stands a chance to be independent of other currencies."
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