Arab central bankers, grappling with the impact of the global financial crisis and a corporate debt scandal in the Gulf region, want a global “early warning system” for financial institutions, the head of the UAE central bank said. But as the Arab Monetary Fund holds its annual meeting in Dubai on Monday, Governor Sultan Nasser Al-Suweidi said it was unlikely there would be major progress made, citing Western reluctance. Emerging market states have been vocal in their criticism of Western financial firms, holding them largely responsible for the crisis which wiped trillions off global markets and sent economies tumbling into recession or facing severe downturns. The crisis prompted central banks to slash interest rates as governments poured funds into financial sectors, and provided emergency loans and guarantees to restore credit flow. Central bankers and the heads of monetary agencies from 22 Arab states will discuss the creation of the warning system. “It is put on the table for discussions. We discussed it in April at the IMF/World Bank meetings, there was absolutely no answer from the western central banks,” Al-Suweidi said. “I don't think we will be finding a solution today.” The meeting comes as Arab states wrestle with the economic crisis and follows a summit that thrust the G20 group of countries, which includes Saudi Arabia, onto center stage as the body to lead global economic coordination. As the G20 did, Arab central bankers are expected to discuss measures to tighten regulations in the financial sector after defaults at two conglomerates, Saad and Ahmad Hamad Algosaibi & Bros left regional and international banks facing billions of dollars in potential losses. Banks in the Gulf region have seen earnings hit by provisions set aside to cover their exposure to the Saudi groups and central bankers indicated more would be needed. Kuwait's central bank chief said lenders are expected to continue to book provisions for the rest of the year, in published remarks on Monday. Meanwhile, the UAE's central bank governor said he expected commercial banks' third and fourth quarter financial results to be lower due to the provisions as well as the global crisis. Adding to the financial headwinds, lower oil prices compared to last year have seen Arab states facing budget deficits. Crude has dropped from a record around $147 a barrel to $65 a barrel currently, though well of a low of $32 in December. Iraq's central bank governor warned the government to keep its hands off the country's foreign currency reserves, saying the funds should not be used to fill budget gaps. The Arab central bank governors called for greater governance of banks struggling with hefty exposure to troubled local businesses and better regional cooperation. UAE central bank chief Sultan bin Nasser Al Suwaidi said in his opening speech that “the next phase requires closer cooperation between central banks and monetary institutions.” Calls for greater coordination and regulation among Middle Eastern countries was the main theme for Monday's meeting echoing similar calls from the Group of 20, or G20, nations meeting last week. The region's central bankers see coordination as key to monitoring financial firms, reeling from billions of dollars worth ol exposure to local family businesses and real estate. “The global economic crisis proved a need to have a better monitoring and supervision of financial institutions in the Aral world,” Sudan's central bank governor, Sabir Mohamed Hassan said in a speech given at the meeting. Financial firms throughout the Middle East are struggling with exposure to two of the region's largest conglomerates, Ahmad Hamad Al Gosaibi Bros. & Co. and the Saad Group. Both companies defaulted on some loan obligations earlier this year and lawsuits against the two firms are stacking up as regional lenders try to retrieve thei cash. A list seen by Zawya Dow Jones shows exposure of at least $7.4 billion to global firms via syndicated loans, but total exposure including local banks is much higher. Al Suwaidi said that 13 of his country's banks have exposure to the two the groups, and promised reveal a list of firms with their total liabilities. He added that banks' earnings will be lower this year as they take provisions.