DUBAI, (Reuters) – The United Arab Emirates has decided to withdraw from Gulf Arab plans for monetary union, the state news agency said on Wednesday, throwing the long-awaited project into doubt.

The UAE would keep its dirham currency pegged to the U.S. dollar and monetary policy would otherwise remain the same, Central Bank Governor Sultan Nasser al-Suweidi said according to state news agency WAM.

“An official source in the foreign ministry said that the United Arab Emirates has decided not be a party to the Gulf monetary union agreement,” WAM said.

The UAE and four of its neighbours, including Saudi Arabia, had planned to launch a common currency.

But the UAE, one of the major candidates to host a joint central bank, expressed reservations over a May 5 decision to base it in the Saudi capital Riyadh.

Gulf Arab states must ratify the monetary union deal before a Gulf monetary council, the first leg of the central bank, can start operations. They have until Dec. 12 to enact the deal.

The UAE is the second country to drop out of the monetary union plan since Oman opted out at the end of 2006.