EC5901 International Finance 2015/16
University of St Andrews
Dr. Gosia Mitka
Situation: A delegation from the Gulf Cooperation Council (GCC) is visiting the
European Central Bank (ECB) to meet with the PresidentMario Draghi and his experts.
The delegates will ask for advice and discuss issues related to implementation of a
monetary and common currency union of the GCC.
Task: Prepare a briefing for the ECB President addressing the following questions:
Critically assess the prospects for introduction of a common currency in the GCC
Member States. Discuss the feasibility and potential benefits of this currency union.
Will this be an optimal currency area? What lessons can the GCCMember States learn
from the European experience?
Remember: The President is a very busy person. Although he wants to know the
background of the monetary and currency union formation he does not have time to
read lengthy documents. He needs processed and condensed information. He will
know that you invested time and effort in it anyway. If you do a good job he may
Word limit: 1500 words
Suggested questions to consider in your essay:
What is an economic, monetary, and currency union? What are their costs and
benefits? What is an optimum currency area? Do you think that the Gulf Monetary
Union with single currency will be one? Why / why not? What are the challenges that
the GCC economies are currently facing? What steps have been taken so far to
establish monetary union and introduce the common currency? In the light of these
past and recent developments how likely do you think will the common currency be
implemented? How likely are the remaining countries to join? In your answer refer to
the European experience (is EMU an optimal currency area?).
References thatmay help you start:
? Coppeland (2013) Chapter 11: “Optimumcurrency areas and monetary union”
? Pilbeam (2013) Chapter 16: “The European Monetary System and European
? Krugman, Obstfeld, Melitz (2015) Chapter 10: “Optimum Currency Areas and
? Mundell (1961) “A Theory of Optimum Currency Areas”, American Economic
? Sturm, Siegfried (2005) “Regional Monetary Integration in the Member States
of the Gulf Cooperation Council”, ECB Occasional Paper No. 31
? Fasano (2003) “Monetary Union Among Member Countries of the Gulf
Cooperation Council”, IMF Occasional Paper
? Khamis and Senhadji (2010) “Impact of the Global Financial Crisis on the Gulf
Cooperation Council Countries and Challenges Ahead: An Update”, IMF
Check the websites:
? The Gulf Cooperation Council: The Monetary Union and the Single Currency
? Gulf Monetary Council
General points to take into account
? The essay should reflect a good understanding of the theory and empirical
findings. Hence, students should aim for argument and analysis rather than a
simple list of facts.
? Econometric analysis is not expected. However, you are expected to support
your answer with the analysis of economic data using graphs. You are also
encouraged to use a model like the GG-LL framework (in Ch 10 Krugman,
Obstfeld and Melitz).
? The word limit should be strictly observed, and penalty applies if the rule is
broken (remember – the President is a busy person!).
? Please pay attention to the proper format of citations and references. The
Harvard referencing system is the most frequently used; it is also known as the
Author-Date style. In this system the name of the creator of a piece of
information and the date of publication is emphasized, with the list of
references in alphabetical order at the end of your piece of work.
? You are required to word process your essay and to submit it electronically via
MMS by Tuesday 17th November 2015 at 12 noon. If your assignment is
submitted after the published submission date you will be AUTOMATICALLY
? YOU MUST SUBMIT YOUR ASSIGNMENT IN PDF FORMAT.
? This assignment can be done individually or in groups of up to 3 people. IF YOU
WORK IN GROUPS PLEASE SUBMIT ONLY ONE COPY OF THE ESSAY and make
sure you incorporate the registration numbers of all the members of the
? Plagiarism, inadvertent or otherwise, is the second worst academic sin. Do not
commit it. Use your own words. Never cut and paste for the purposes of this
activity. Here are simple rules for avoiding plagiarism:
1. If you quote more than four words directly from a text, you must put
them between inverted commas and give the precise reference.
2. Whenever you paraphrase (express the same idea, but not in the
precisely same words) from a source (text, paper, book, website etc.),
you must give the precise reference.
3. It is forbidden to “borrow” or refer to another student’s essay (whether
in the same year or not, and whether at St Andrews or elsewhere) or
from your own essays prepared for other modules.
4. We do both human and automatic checks (against comprehensive and
always up to date databases) for plagiarism! The consequences are dire
and it’s really not worth the risk!
Format: IMF Staff Briefing Style (1. For information, 2. For decision)
Part of the exercise is to learn how to draft documents that present information in an
efficient way and are used in large international organizations. We will use option 1.
For information. Often information is presented as a background for a decision, and
then a policy recommendation or recommended steps/actions are included. In this
case we focus on presenting a briefing for information.
As a guideline please use the IMF Staff Discussion Note SDN/15/05:
“Islamic Finance: Opportunities, Challenges, and Policy Options” by Alfred Kammer,
Mohamed Norat, Marco Piñón, Ananthakrishnan Prasad, Christopher Towe, Zeine
Zeidane, and an IMF Staff Team.
Since there is a word limit your document will be much shorter than the one in the
example. Therefore you don’t need to include the table of content nor a fancy title
page. Focus on the part from page 6 onwards. Your document should be organized as
? Executive summary should contain a small introduction of the context in which
the document has been prepared. It should contain the punch line of the
document. You can skip conclusions and include them here instead. This part
should be written at the very end.
? You can divide the main body into sections and give them titles. Each section
can contain a number of paragraphs.
? The first sentence in each paragraph should be in bold and should summarize
the paragraph. It should be possible for a busy reader to get the message by
reading the text in bold only.
? Data and figures should be presented in Figure Boxes e.g. on page 13. Each
figure should be accompanied with an action title in italics, which is the
message that the reader should take away from reading the diagram.
? It’s up to you if you wish to include Boxes, as Box 3 on page 21, to drawreader’s
attention and make some information stand out (e.g. particular theory).
? In case you wish to include some information that you refer to in the text which
is relevant yet would hinge the flow in the main body you can include it as an
Annex, as Annex 1 on page 33-34 (this section is not compulsory – just an
Hint: It’s a little bit like baking a cake. First you need to decide what cake to bake (essay
question – no problem here – it’s given, you can choose your own name – the title),
then you need to make the list of ingredients and get them (decide what topics to
include, do the reading, get the data/diagrams), choose the baking form (decide for
sections) and then you bake it (write the paragraphs). Once it’s done you put the icing
and decorate it (sentences in bold and executive summary).
The President cares about how you present it (be clear and get to the point) and how
it tastes (get good ingredients/content).
I wish you good luck and happy baking! Upps, I meant happy writing!
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