March 30, 2010Gulf central bankers meet today on monetary union
Central bank governors from four Gulf states will focus on how to push monetary union forward at a meeting in Saudi Arabia starting today, rather than how to bring back the UAE and Oman, analysts say.
Gulf rulers have endorsed a much-delayed plan for monetary union despite the absence of the UAE and Oman.
Central bank governors from Qatar, Saudi Arabia, Kuwait and Bahrain are now expected to set an agenda for coming months and pick someone to head the joint monetary council board when they meet for the council’s inaugural two-day meeting in Riyadh today.
“They will discuss organisational matters and set their own agenda,” said a senior official from the GCC.
GCC Secretary General HE Abdul Rahman al-Attiyah said the governors would discuss legal and administrative issues “to speed up the single currency”.
“I do not expect at this stage any announcement about the timeline ... of the monetary union,” said John Sfakianakis, chief economist at Banque Saudi Fransi Credit Agricole Group.
“Overall, they will now focus more on technical aspects that are more pressing than on decisions that have a more political tone,” he said.
The monetary council, which should now convene every two months, is expected to lay the foundations for a regional central bank and prepare the launch of a single currency.
The six members of the GCC, a loose political and economic bloc, started to debate the project, crafted to emulate the eurozone, in 2001 but political rivalries slowed down progress.
Last year, the bloc abandoned an initial 2010 deadline for issuing common notes and coins, saying the joint monetary council would draw a new timeline for the project.
A lack of political will and resistance to the dominance of Saudi Arabia, the largest Arab economy and the world’s biggest oil exporter, remain a challenge.
“One big challenging thing is the execution,” said Daniel Kaye, senior economist at National Bank of Kuwait. “Europe was always backed up by desires of much closer political integration. I do not sense any appetite for that in the Gulf.”
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