Dubai: The UAE Central Bank Tuesday announced the appointment of a high profile International Advisory Council that will provide independent advice to the apex bank on matters relating to monetary policy, macro prudential policies and the overall management of the financial system.

The newly formed council includes eminent personalities such as: Dr Robert Mundell, Dr David Dodge, Dr Joseph Yam, and Sir John Bond who have long experience in macro economic policymaking, currency dynamics, international banking and fin-ancial services industry.

"In a world of highly challenging and rapidly changing financial landscape, the UAE Central Bank needs to learn from the experiences of this group to improve the UAE's financial and monetary stability and Central Bank governance," Khalil Al Fouladi, the Central Bank Board Chairman, and Sultan Nasser Al Suwaidi, the UAE Central Bank Governor said in a statement. Analysts said that although the creation of the new Advisory Council need not necessarily imply an imminent move towards an independent monetary policy or depegging the currency from the dollar, the expertise of the council members will be crucial in any decision relating to the UAE's role in GCC Monetary Union and ultimately the dirham's link to the dollar.

Analysts and senior bankers said it is a very positive development for the UAE to have such high profile committee advising the central bank on policy matters.

"It is a very important development in the context of the UAE's efforts to integrate its financial system with the global financial system. The expertise of this committee will certainly help it to devise policies that align with the global trends," said Dr Nasser Saidi, Chief Economist of Dubai International Financial Centre.

Active market

Bankers said the UAE's efforts to create an active debt capital market and the effective use of the government debt market as a monetary policy mechanism to control liquidity and interest rate will require international expertise.

At the height of the liq-uidity boom between 2004 and 2008, the UAE experienced average credit expansion in excess of 30 per cent. Last year the credit growth was about 4 per cent. "An active government debt market could have prevented such huge fluctuations in the bank credit," said a banker.

At a recent conference in Dubai, Al Suwaidi said the Central Bank has plans to create a government debt market with deals in government securities of various maturities.

High profile advisers

Professor Robert Mundell is presently professor of economics at New York's Columbia University. He won the 1999 Nobel Prize in Economics for his pioneering work in monetary dynamics. Dr David Dodge, a former governor of the Bank of Canada co-chairs the Global Market Monitoring Group of the International Institute of Finance. Dr Joseph Yam was instrumental in the formation of the Hong Kong Monetary Authority in 1993 and was appointed as its Chief Executive, a position he held till his retirement at the end of September 2009. Sir John Bond former chairman of HSBC has nearly 50 years of experience in international banking and finance is currently the chairman of Vodafone.