2010-03-30The head of Saudi Arabia's central bank Muhammad al-Jasser was named as the first chairman of the Gulf Monetary Council, a precursor to a planned Gulf central bank.
The move underscores the dominance of Saudi Arabia, the biggest economy in the Gulf, in a single currency project which many analysts say will be a challenge.
Rasheed al-Maraj, the governor of Bahrain's central bank, will be deputy chairman of the monetary council. The chairman and deputy chairman appointments will be for a year beginning Tuesday.
The council will mainly work on the regulatory framework of the Gulf central bank and push for greater coordination of monetary and foreign exchange policies to pave the way for the launch of a single currency.
Kuwait broke ranks with the other three members of the council by abandoning a dollar peg in 2007.
Here are some facts about Jasser:
Jasser, 55, replaced Hamad al-Sayari as governor of the Saudi Arabian Monetary Agency (SAMA) in February 2009 after almost 15 years as vice governor.
He began his career at the Saudi finance ministry as head of the financial and economic analysis unit in the budget department in 1981 and later became executive director for Saudi Arabia at the International Monetary Fund, a post he held until 1995.
He has also served as a member of the Saudi negotiating team on accession to the World Trade Organisation in 2005. Jasser is also the chairman of state-controlled Saudi Telecom Co .
After joining SAMA in 1995, Jasser helped devise the central bank's reaction to the decade's oil price rally, an onslaught of currency speculation in 2007 and, most recently, its reaction to an oil price slump and credit crisis.
Jasser stood steadfastly by the dollar as a peg for the Saudi riyal -- a policy the kingdom has maintained since 1986 -- saying at the height of speculation in 2008 that the peg served Saudi interests.
In recent months, Jasser appeared to have changed his tone about the dollar. In February, Jasser said: "Given the substantial benefits of being a reserve currency in lowering the cost of borrowing, one should expect competition for the dollar in the future, especially because developed economies have substantially higher government debt burdens than a few years ago".
Gulf currency pegs to the dollar could change when these economies become less dependent on oil, he said. The kingdom is a major holder of dollar assets and a top U.S. ally in the region.
A month earlier, Jasser said: "Pegging the riyal to the dollar is not motivated by emotional or political considerations, but (it is) purely for economic interests".
John Sfakianakis, a veteran economists in Saudi Arabia, said of Jasser's appointment to head the Gulf Monetary Council:
"He is the most experienced and technically-able among Gulf Arab central banker to move this ahead. He has a long experience within the IMF and a long experience as a central banker.
"His statements over the past few months have been leaning in favour of interests of the region when it comes to forex policies ... The indication is that he is not stuck to the dollar, that he could be willing to reassess the situation if it serves national interests".
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