Gulf nations are “on track” to create a new shared currency and will set up a monetary council, a precursor to a joint central bank, by the start of 2010, Saudi Arabia’s central bank Governor Muhammad al-Jasser said.
The countries involved have done a “lot of work” on technical convergence criteria, al-Jasser said at a lunch in Istanbul where he’s attending the annual meetings of the International Monetary Fund and the World Bank.
Saudi Arabia is one of four Gulf countries currently pursuing a shared currency that would allow deeper economic integration and independence from the U.S. on monetary policy. All the participants except Kuwait peg their currencies to the dollar.
Al-Jasser said last month he still hopes the United Arab Emirates, the Arab world’s second-biggest economy after Saudi Arabia, and Oman may reconsider their decisions to pull out of the proposed monetary union.
Saudi Arabia’s “conservative” regulatory regime has been vindicated during the global crisis, al-Jasser said today. The country’s banks, which have seen an increase in non-performing loans, have a capital-adequacy ratio of 16 percent, he said.
Al-Jasser also said that developing countries should focus on boosting demand in their domestic economies.
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