Saudi Arabian Monetary Agency (SAMA) governor Muhammed Al-Jasser was unanimously elected the first chairman of the GCC Monetary Council in Riyadh on Tuesday.
The council will serve as the precursor to a regional central bank in the latest step toward a unified Gulf currency and greater economic integration.
Bahrain Central Bank governor Muhammed Rasheed Al-Maraj was chosen as deputy chairman. Governors of the central banks of Kuwait and Qatar also took part in the inaugural meeting.
However, the United Arab Emirates and Oman, which had voiced various objections to the proposed establishment of a single GCC currency, had no representatives present at the meeting.
“Membership of the Monetary Union is open only to GCC member states, while other Arab countries cannot become members,” Al-Jasser said in his maiden speech as chairman.
Gulf countries agreed on a common currency in 2001, saying it would help integrate their economies. The original timetable would have seen the new monetary unit in place this year, but the deadline was missed after the UAE and Oman pulled out.
Al-Jasser, who has been elected chairman for one year, pointed out that the establishment of the council is a great step forward toward integration of the GCC economies, adding that the council has witnessed gradual changes since its inception 30 years ago.
“The GCC Free Trade Zone was established in 1981, the Customs Union in 2003, followed by the establishment of the GCC common market in 2008,” Al-Jasser said.
“We will strive to forge ahead in mustering the support of all the member countries,” he added, appealing for closer cooperation among members in the wake of the global financial crisis.
“We have to work in harmony to get better results from these efforts.”
The monetary council will lay the foundations for a regional central bank and prepare the launch of the single currency. Al-Jasser said people should not have high expectations. He explained that the council’s first task is to establish the GCC Central Bank.
“Our priority will be to draw up the legal and organizational framework for the Central Bank and this will be done in coordination with the central banks or monetary agencies of the member countries.”
He pointed out that preparations for the issuance of banknotes and coins for the single currency would be developed by the GCC bank.
He did not give a timeframe for the introduction of the single currency but stressed it would happen soon.
There will be an executive body that will function under the board of directors, headed by a full-time executive president and senior executives.
“From Saudi Arabia’s position, it shows a clear commitment to bring all the countries closer together and move toward the currency union,” said John Sfakianakis, chief economist at the Riyadh-based Banque Saudi Fransi-Credit Agricole Group.
“It offers the Monetary Council, and the rest of the states, the ability to tap into the technical resources of Saudi Arabia and that of the (regional) central bank. The rest of the countries are seeking the needed leadership, and Saudi Arabia is demonstrating a clear commitment,” he said.
“In order for them to move toward giving a timeline for the currency union, they need to make important progress in the technical aspects,” said Sfakianakis.
He said the meeting in Riyadh, and the ongoing discussions, reflects “an important political statement and commitment from the four countries that they’re moving on despite, the exit of Oman and UAE.”
- Arab News
