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The economic literature has presented two alternative schemes to determine whether a group of countries may benefit from establishing a currency area among them. The first has to deal with determining the characteristics of these countries, and it. May be called the conditional Approach. Alternatively, the Cost and Benefit Approach may be utilized. Each one has its strenghts and weaknesses.

In the present paper, the first approach was adopted, and it was found that the Gulf Cooperation Council states have emerged to fulfill several of the criteria proposed by this approach. The major lack of fulfillment occurred with respect to the product diversification criterion. Although the study calls for increasing coordination amongst the GCC states so as to advance toward satisfying this condition, it by no means suggest that the Cost and Benefit analysis should be ignored. Rather, it recommends analyzing it, together with the question of national identity; and the willingness to accept policies which may be imposed on each national economy.