March 13, 2011
Unrest will not affect GCC monetary union
Unrest in the Arab region will not affect a landmark plan to create the world’s second major monetary union in the oil-rich Gulf but no timetable has been set yet for a single currency, Bahrain’s central bank governor said on Saturday.
Rasheed Al Meraj said the monetary union which was launched by four Gulf Cooperation Council (GCC) countries early this year will remain open for the other two members to join at a later stage.
In an interview with 'Emirates247', Meraj said the four members of the GCC monetary union are watching financial crises with the European Union but stressed that such problems would not discourage regional states.
Speaking about the recent unrest in Bahrain, he dismissed reports which spoke about a panic rush for withdrawal of bank deposits but acknowledged there has been a pick up in withdrawal of such deposits in local currency.
“We have created a solid framework to push ahead with the monetary union, which is the GCC monetary council and we are pursuing efforts to complete the infrastructure of this council,” Meraj said in the interview after a meeting of GCC central bank governors in Abu Dhabi.
“As for the current situation in the Arab World, I don’t think it will affect the monetary union….the project is progressing as planned but it is difficult to speculate on when it will materialise or when the single currency will be out… I just don’t want to give any speculations because we are working within a specific framework and our moves are built on a solid and firm base because this is a major project and we need to ensure all fundamentals for it are there.”
Meraj said the four GCC members of the monetary union have been watching closely the recent financial problems within the EU, with which the 30-year-old Gulf group has been consulting regarding its own currency union.
“We have been through our own monetary project before those problems erupted so I don’t think they will delay our plans…we are quite open and always watching those developments because we think we can benefit from them.”
Asked whether he expected the UAE and Oman to rejoin the currency union which they have quit for some reasons over the past three years, he said:”These were sovereign decisions and the members of the monetary union have always wished that all GCC countries join the union….any way, the monetary union is still open and will remain so in case the other GCC nations want to join it.”
Meraj, whose tiny Gulf island nation has the largest offshore banking system in the Middle East, said the recent turmoil in Bahrain has not had a major impact on the banking sector and that banking operations were almost normal.
“We are still watching the situation and hope there will be no serious repercussions….there have been no panic withdrawals but what we have witnessed is a pick up in withdrawals of deposits in Bahraini currency (dinar)…we have noticed that the rate of dinar circulation has increased during this period but has now started to return to normal levels,” he said.
“Liquidity has not been largely affected but I don’t want to say that there is no concern…there is some concern but I can tell you there has been no panic rush for withdrawal from banks during this period.”
Emirates 24/7
Unrest in the Arab region will not affect a landmark plan to create the world’s second major monetary union in the oil-rich Gulf but no timetable has been set yet for a single currency, Bahrain’s central bank governor said on Saturday.
Rasheed Al Meraj said the monetary union which was launched by four Gulf Cooperation Council (GCC) countries early this year will remain open for the other two members to join at a later stage.
In an interview with 'Emirates247', Meraj said the four members of the GCC monetary union are watching financial crises with the European Union but stressed that such problems would not discourage regional states.
Speaking about the recent unrest in Bahrain, he dismissed reports which spoke about a panic rush for withdrawal of bank deposits but acknowledged there has been a pick up in withdrawal of such deposits in local currency.
“We have created a solid framework to push ahead with the monetary union, which is the GCC monetary council and we are pursuing efforts to complete the infrastructure of this council,” Meraj said in the interview after a meeting of GCC central bank governors in Abu Dhabi.
“As for the current situation in the Arab World, I don’t think it will affect the monetary union….the project is progressing as planned but it is difficult to speculate on when it will materialise or when the single currency will be out… I just don’t want to give any speculations because we are working within a specific framework and our moves are built on a solid and firm base because this is a major project and we need to ensure all fundamentals for it are there.”
Meraj said the four GCC members of the monetary union have been watching closely the recent financial problems within the EU, with which the 30-year-old Gulf group has been consulting regarding its own currency union.
“We have been through our own monetary project before those problems erupted so I don’t think they will delay our plans…we are quite open and always watching those developments because we think we can benefit from them.”
Asked whether he expected the UAE and Oman to rejoin the currency union which they have quit for some reasons over the past three years, he said:”These were sovereign decisions and the members of the monetary union have always wished that all GCC countries join the union….any way, the monetary union is still open and will remain so in case the other GCC nations want to join it.”
Meraj, whose tiny Gulf island nation has the largest offshore banking system in the Middle East, said the recent turmoil in Bahrain has not had a major impact on the banking sector and that banking operations were almost normal.
“We are still watching the situation and hope there will be no serious repercussions….there have been no panic withdrawals but what we have witnessed is a pick up in withdrawals of deposits in Bahraini currency (dinar)…we have noticed that the rate of dinar circulation has increased during this period but has now started to return to normal levels,” he said.
“Liquidity has not been largely affected but I don’t want to say that there is no concern…there is some concern but I can tell you there has been no panic rush for withdrawal from banks during this period.”
Emirates 24/7
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