Delay likely for Gulf single currency
11/2/2009 4:17:45
Kuwait city: Gulf states plan to launch their monetary council, a precursor for a joint central bank, in 2010 but the planned single currency may be delayed, the Saudi central bank chief said yesterday.
“The (Gulf) monetary council will be established in 2010. It will be entrusted to complete other procedures,” Mohammad Al Jasser, head of the Saudi Arabian Monetary Agency (SAMA), told reporters in Kuwait.
The “procedures,” such as the launch of the single currency, “will be completed in the correct way to achieve the required results,” Jasser said on the sidelines of the first Kuwait Financial Forum.
The “procedures,” such as the launch of the single currency, “will be completed in the correct way to achieve the required results,” Jasser said on the sidelines of the first Kuwait Financial Forum.
“It may be completed one year ahead or one year late. This is not important.
The important thing is the success of the project.”
I bet one year ahead ...
Saudi Arabia, Kuwait, Bahrain and Qatar, members of the Gulf Cooperation Council (GCC), signed a pact in June to create a joint monetary council, which will later become the joint GCC central bank.
The remaining two GCC members, the United Arab Emirates (UAE) and Oman, did not sign after deciding to withdraw from the project.
The UAE was upset at the selection of the Saudi capital Riyadh to host the future GCC central bank, while Oman withdrew from the monetary union saying it was not ready to meet the preconditions.
Jasser, however, said that he is still hopeful that the two states will join the union later.
Saudi Arabia has already ratified the pact while the three other states are expected to ratify it before the end of the year, he said. GCC states have agreed on a number of technical criteria for the monetary union but a number of other issues remains unresolved.
In December Kuwait is due to host the GCC annual summit, when leaders expect to take a decision on the single currency.
At their summit in Bahrain in 2001, the GCC leaders set 2010 as the target to launch the monetary union and single currency, but many experts have lomg said that target is too ambitious and unrealistic.
No case has been made to diversify assets from the dollar in Saudi Arabia, central bank governor Muhammad Al Jasser said, adding bank lending in the kingdom will keep rising.
“Nobody has made that case yet,” he told reporters on the sidelines of the financial forum when asked about diversification from the dollar, adding: “Credit will continue to grow at a rate, which is natural.”
He also said non-oil sector growth in the Gulf’s top Arab economy will see a growth rate at “north of 4 percent”, while it will stay near last year’s level for 2009. However, the world economy is still facing recession and high unemployment and will recover only gradually, Al Jasser said.
“I don’t think that the recovery will be fast. The recovery period will be gradual,” he said. “Regarding the developing states and the Gulf countries, it will be quicker because of the opportunities of growth and the demographic changes in our countries and in countries like China and India.
The UAE was upset at the selection of the Saudi capital Riyadh to host the future GCC central bank, while Oman withdrew from the monetary union saying it was not ready to meet the preconditions.
Jasser, however, said that he is still hopeful that the two states will join the union later.
Saudi Arabia has already ratified the pact while the three other states are expected to ratify it before the end of the year, he said. GCC states have agreed on a number of technical criteria for the monetary union but a number of other issues remains unresolved.
In December Kuwait is due to host the GCC annual summit, when leaders expect to take a decision on the single currency.
At their summit in Bahrain in 2001, the GCC leaders set 2010 as the target to launch the monetary union and single currency, but many experts have lomg said that target is too ambitious and unrealistic.
No case has been made to diversify assets from the dollar in Saudi Arabia, central bank governor Muhammad Al Jasser said, adding bank lending in the kingdom will keep rising.
“Nobody has made that case yet,” he told reporters on the sidelines of the financial forum when asked about diversification from the dollar, adding: “Credit will continue to grow at a rate, which is natural.”
He also said non-oil sector growth in the Gulf’s top Arab economy will see a growth rate at “north of 4 percent”, while it will stay near last year’s level for 2009. However, the world economy is still facing recession and high unemployment and will recover only gradually, Al Jasser said.
“I don’t think that the recovery will be fast. The recovery period will be gradual,” he said. “Regarding the developing states and the Gulf countries, it will be quicker because of the opportunities of growth and the demographic changes in our countries and in countries like China and India.
“The activation of the exit strategies is still too early because the issue needs better utilisation and needs to be done gradually in the next months,” Jasser said.
Source ::: AFP/Reuters
