GCC currency to be linked to dollar

A recent meeting of GCC central bank governors has decided to peg the proposed GCC common currency to the U.S. dollar.

With Kuwait pegging the dinar to the dollar recently, all GCC currencies are now pegged to the greenback.

The European Central Bank has, meanwhile, agreed to conduct a study on behalf of Gulf states to reach a monetary union by January 2010.

"We want to benefit from the European Central Bank's experience in creating the euro," Hamoud Sangour Al Zadjali, executive president of the Central Bank of Oman, said yesterday.

All GCC member states must integrate their economies by 2005 to clear the way for the union. Al Zadjali said the GCC committee would meet frequently to monitor the progress.

He said the sixth edition of the GCC Banking Conference, to be held in Muscat on October 26-27, will discuss the euro in the context of the Gulf currency.

He said it was held every two years to discuss the most pressing subjects that banks faced in the region. Thus, the conference will also discuss money laundering and financing of terrorism.

"Fortunately, we in Oman don't have any case reported," he said, adding that regulations have been in place not only in Oman, but in the GCC to combat money laundering and financing of terrorism.

He said stringent steps would be taken to make Gulf banks meet capital adequacy norms. "The emphasis now is on safeguarding our banking system."

Al Zadjali said GCC bank mergers were welcome provided shareholders approved them. "We are always open for such a move, we should have big and strong banks in the GCC."

The conference would attract 400 senior banking and finance officials from the Gulf and elsewhere.

Euro in context of GCC common currency, liberalisation of financial services in the WTO, fighting money laundering and financing of terrorism, Basel's new capital accord and corporate governance will be discussed at the two-day conference.