Four GCC members seek unified bank law
09/Mar/2010
Business 24|7
Officials from four Gulf nations will meet in Riyadh today to discuss unified rules for supervision of their banks as part of plans to bridge the gap in their financial and economic systems ahead of launching a landmark monetary union.
The officials from Saudi Arabia, Kuwait, Qatar and Bahrain, who form the Banking Control and Supervision Committee, will review a draft law on the unification of such practices before presenting a final draft for their central bank governors and other monetary officials, Saudi newspapers reported yesterday.
"The Committee will discuss a draft law on unifying legislations related to control and supervision of the banks in the four countries," Al Jazira said.
The four states, members of the six-nation GCC, have already assigned a regional consultancy firm to conduct a study on drafting common banking regulations to be enforced in the monetary union.
Today's talks come ahead of a meeting of central bank governors and other monetary officials from the four countries in Riyadh later this month to form the planned Gulf Monetary Authority, which will manage the first phase of the GCC currency union and pave the way for the creation of a Gulf Central Bank, which will be based in Saudi capital Riyadh.
At their annual summit in Kuwait just before the end of 2009, GCC heads of state endorsed the long-awaited currency union, the Middle East's first monetary project and the world's second major currency union after the EU.
The UAE and Oman have quit the union for different reasons, leaving the four members to pursue the project. Although the union was launched this year, Gulf officials believe the creation of a single currency could take at least five years.
Quoted by Al Jazira, a well-known Saudi economist expected the four signatories to peg their single currency to the US dollar on the grounds their currencies are already linked to the greenback.
"My expectation is that the GCC single currency will be pegged to the US dollar as most of them are already pegged to the dollar… The Kuwaiti dinar is tied to a basket but the dollar is the dominant component of that basket," the Saudi economist, Fadl Al Buainin, said.
