Abu Dhabi hopes to become GCC economic capital

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The UAE is expected to revive its bid to be home to the planned Gulf central bank when regional heads of state hold their annual summit in Oman in late November, official sources said yesterday.

While other GCC members would like to host the GCB headquarters, the UAE believes it has an edge in the race on the grounds it was the first member to offer to be home to the institution.

"As the Governor has stated before, the UAE was the first member state to offer to host the GCC central bank and is still sticking to its offer," a UAE Central Bank source said. "We would like the GCB to be headquartered in the UAE because the country already has the necessary infrastructure for this project."

GCC leaders, who will meet in Muscat in the last week of November, are due to decide on the location of the GCB, part of their planned monetary union. Central bankers and finance ministers endorsed the project at talks in Jeddah this week and said they would present proposals to their foreign ministers, who in turn will submit them to the Muscat summit for approval.

A Gulf monetary authority is to pave the way for the creation of the GCC central bank, which will decide on the launching of the common currency six months after it begins functioning, according to the Riyadh-based GCC Secretariat.

The currency will have a fixed exchange rate against local GCC currencies for a transitional period, during which those currencies will be gradually phased out.

In a document revealed last month, the GCC Secretariat said the central bank would enjoy full autonomy and its main objective was to guarantee currency stability in the monetary union's zone, draw up monetary policies for the single currency and manage foreign reserves in that currency.

A UAE banker said: "I think the UAE enjoys all economic and financial requirements for hosting the GCC central bank. It could be based in Abu Dhabi, which is home to the UAE Central Bank and the Arab Monetary Fund, an important Arab League institution that co-ordinates monetary policies in the whole region."

In recent statements UAE Central Bank Governor Sultan bin Nasser Al Suwaidi said the UAE was still pushing to be home to the GCC central bank. "It was not a decision but an offer from us to host the GCC central bank," said Al Suwaidi. "We were the first member state to make this offer. We in the UAE would love to see this bank based here. It will be a very important regional institution and we would like to be its base. The UAE possesses all financial, economic and logistic capabilities to host the GCC central bank."

By Nadim Kawach

© Emirates Business 24/7 2008