Riyadh set as Gulf region’s central bank base

Leaders of the oil-rich Gulf Cooperation Council on Tuesday agreed to base any future regional central bank in the Saudi capital of Riyadh, pushing forward efforts to establish a regional monetary union.

However, while an agreement on where the central bank will be located – which had been a point of contention – will be seen as some progress, the GCC states are still far from forming a single currency. Oman has said it is not ready to join a monetary union, Kuwait unilaterally delinked its peg to the US dollar in 2007 and it is widely accepted that the Gulf states will not meet a 2010 deadline for the proposed single currency.

“This will definitely be a catalyst for making progress toward the GCC union,” said John Sfakianakis, chief economist at the SABB Bank. “Riyadh is not a regional financial centre, but it has the highest concentration of capital in the broader region.’’