DUBAI: Just ahead of a meeting tomorrow and Thursday of finance and economy ministers from Saudi Arabia, the UAE, Kuwait, Qatar and Bahrain to discuss monetary union, the Dubai International Financial Center Authority released a report outlining options for the institutional structure and governance of a proposed Gulf central bank, a central requirement to meeting the January 2010 deadline for implementation of a GCC common currency.
The report entitled "The Institutional Framework of the Gulf Central Bank" outlines a number of possible central bank structures and monetary policy voting formulas, as well as other elements vital to setting up a well-governed central bank. It recommends creating a new Gulf Central Bank (GCB) with its own staff and administration, noting that this would be the most effective as well as the most welcomed and "credible" in the eyes of regional and global markets.
It says the GCB could be formed and in operation by 2009 to prepare the way for the currency's introduction and to test and fine-tune the bank's decision-making mechanisms. While financial markets don't expect the common currency to be implemented by the deadline, the report says 2010 is still feasible and "largely a matter of political will".
According to the report, the GCB should be managed by an executive board, with the governors of the national central banks and monetary authorities joining the executive board to form a monetary policy committee, which would be the main decision-making and monetary policy-making body.
"This analysis moves forward the debate regarding a Gulf central bank and currency union, and reflects the DIFC's mission to promote both regional economic development and Middle East integration into the global economy," said Nasser Al-Shaali, CEO of the DIFC, said.
