The head of Saudi Arabia's central bank Tuesday was named the first chairman of a council that will serve as the precursor to a regional central bank in the latest step toward a unified Gulf currency and greater economic integration. Saudi Arabian Monetary Agency (SAMA) Governor Muhammad Al-Jasser's appointment came during the first meeting of the newly-created Gulf Monetary Council – a body that groups together Saudi Arabia, Kuwait, Bahrain and Qatar. The new council's deputy chairman will be Bahrain's central bank head Rasheed Al-Maraj. Both he and Al-Jasser will hold the jobs for one year before the slots rotate to Kuwait and Qatar. Al-Jasser said Tuesday that the monetary council would not set a deadline for the launch of a common currency, which has been under discussion for a decade. “Time is not the most important thing,” he said. “The most important thing is to find a good formula to issue the currency and achieve agreement between all the Gulf states on all technical aspects of the single currency.” GCC Secretary General Abdulrahman Al-Attiyah reiterated hopes that the UAE and Oman would rejoin. “We hold on to the hope of completing the monetary union with memberships of the two brotherly states of the UAE and Oman. The membership would represent a crucial addition to the monetary union,” he said at Tuesday's meeting. The United Arab Emirates and Oman, have opted out of the plan. Al-Jasser said: “The door remains open for them (Oman and the UAE) to join the Monetary Council, and we haven't lost hope that they may return… we respect their analytical studies on their joining the Council.” “The Council will hold a minimum of six meetings per year, in addition to the meetings of its technical committees.” “The Monetary Union and the single currency will produce coordination in the monetary policies of member states, the ability to compare prices, ease and transparency in financial dealings between the citizens and residents of the different Gulf nations.” “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. The new council is charged with drawing up the framework of the single currency, including an exchange rate system and setting up the regional central bank with an eye on developing a Mideast equivalent of the European Union. Still to be determined about the single currency is whether it would be pegged to a basket of currencies, the US dollar or some other currency. Officials had said they wanted to set up the unified currency by this year, but that deadline appeared unrealistic from the outset. Analysts said the new target is around 2015, but even meeting that tentative timeframe and moving on with greater integration requires overcoming hurdles that are obstructing efforts to set up a Gulf customs union, and agreements on transfer of labor, services and capital. “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.
