AGCC mulls new payment system - The Arab Gulf Cooperation Council countries are working to establish a regional payment system that will help boost trade and act as a precursor to monetary union.

Times of Oman 7/4/2009

"We agreed on some steps to be taken like the payment system,” Hamood bin Sangour Al Zadjali, executive president of Central Bank of Oman, said here yesterday.

“There will be a strategy on the payment system among the AGCC countries, for improving trade, for improving payments.”

The new regime aims to facilitate money transfers between AGCC countries and will also establish a regional ATM network, Al Zadjali said.

Gulf central bankers met here yesterday to discuss plans to create a unified currency. Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman agreed in 2001 to form a European Union-style monetary union by 2010 to boost regional trade. Oman pulled out in 2007.

The central bank governors have not reached any agreement on the location of the common central bank to be used in plans for monetary union, Al Zadjali added.

“A signature is still not there on the agreement because there is still no agreement on the location and currency of the central bank,” he said.

AGCC rulers were likely to meet in May to discuss the location for the common central bank, he said. After the location was decided, policymakers would decide whether the currency would be pegged to the US dollar, he added.

UAE Central Bank Governor Sultan Nasser Al Suweidi yesterday said members of the six-nation council needed to address problems caused by the financial crisis each according to its own unique circumstances.

“Each AGCC country has to tackle their own financial crisis according to their own individual need.

“There should not be any unified decision for all states,” Suweidi said.

“The impacts of the global financial crisis, which started in the US since the mid-2007, had spread worldwide, engulfing all countries of the world, although in differing degrees from one country to another, according to the extent of the integration of each country in the international economy,” Hamood bin Sangour Al Zadjali, said adding that “this necessarily requires us to strengthen our togetherness and deepen our cooperation in order to realise our common goals”.

The general economic policy aims at preserving the internal and external financial balance and achieving a stable macro-economy, Al Zadjali said. It also aims at maintaining stability of the local prices, stability of the exchange prices as well as regulating the levels of local liquidity in line with the objectives of the monetary policy and the requirements for the active movement of the economy including the different productive units, specially in the private sector, he added.