A Gulf monetary union pact has been agreed by four of the six nations in the Gulf Co-operation Council at a summit in Kuwait, the country's finance minister has said.
Bahrain, Kuwait, Qatar and Saudi Arabia signed and ratified the pact on Tuesday, which will see them work towards setting up a joint central bank and implementing a single currency.
The United Arab Emirates, the Gulf's second largest economy, opted out of the union over objections to selecting the Saudi capital, Riyadh as the base for the future Gulf central bank.
Oman said it could not meet the union's prerequisites for joining at this time.
"The Gulf monetary union pact has come into effect," Mustafa al-Shamali, Kuwait's foreign minister, was quoted by the official Kuna news agency as saying.
"Accordingly, GCC central bank governors will work out a timetable for the establishment of the Gulf central bank to ultimately launch the single currency."
Al-Shamali said that he expected the UAE and Oman to join the monetary union "in the near future".
Under the pact, a Gulf monetary council to be established early next year would set up the stage for a central bank which would then issue a single currency.
Al-Shamali's announcement came as GCC leaders concluded their two-day annual summit in the capital, Kuwait City, during which they discussed a number of economic integration projects and political issues.
"We do not accept any military action against Iran. Any tension in the region will reflect on our situation. We have many problems already and we don't want any more"
Sheikh Mohammad al-Sabah, Kuwait's foreign minister
The energy-rich bloc addressed Iraq's decision to award a number of contracts to international oil companies with the aim of boosting its crude production from a current 2.5 million barrels per day to around 10 million bpd over the next several years.
"We are not threatened by Iraq's plans to expand its oil production," Sheikh Mohammad al-Sabah, Kuwait's foreign minister, whose country is the current president of the GCC, said.
The GCC boasts around 45 per cent of the global proven crude reserves and as much as one-quarter of the world's gas resources.
It pumps around 15 million bpd of crude, or just under one-fifth of world consumption.
The summit also tackled Iran's controversial nuclear programme, the Middle East peace process, calls for a crackdown on groups accused of causing trouble in northern Yemen, and economic co-operation in a volatile world market.
"We do not accept any military action against Iran," Al-Sabah said at the end of the summit.
"Any tension in the region will reflect on our situation. We have many problems already and we don't want any more."
The final communique of the Gulf summit said its leaders welcome "international efforts to resolve the Iranian nuclear programme crisis through peaceful means".
The West accuses Iran of working to develop a nuclear bomb but Tehran has repeatedly denied the allegations, saying its nuclear programme is for civilian purposes.
The six nations also agreed to establish a joint rapid reaction military force to tackle security threats, such as the incursion by Yemen's Houthi rebels into Saudi Arabia last month.
"The force will be one of the pillars that will support stability and security in the region," Abdul-Rahman al-Attiyah, the secretary-general of the GCC, said.
The Gulf states, a number of which host US military bases, have spent billions of dollars boosting their armed forces since Iraq's 1990 invasion of Kuwait.