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Volume :12 Issue : 45 1986      Add To Cart                                                                    Download


Auther : By: Dr. Mohamed A. Al-Saqqaf

Following the unified Economic Agreement between the countries of the Gulf Cooperation Council (GCC) signed on November 11, 1981 which amongst other matters granted GCC citizens the right to engage in various types of economic activities. We are here posing the question as to whether we are on threshold of an era which will witness closer cooperation and integration in the banking sector within GCC countries or is it premature to expect such a level of coordination.

It is noted that when setting up the principles and bases for cooperation between GCC countries in all fields of activities and the form of organizations for achieving the objectives, the members must have taken into consideration the nature of relationship that exists between them and the overall experience of other regional cooperation, be it Pan-Arab or other international organizations.

One example of such form of cooperation is the experience of the European Economic Community (EEC) which can be regarded as a model for enhancing the process of Gulf banking cooperation – such experience started by sectorial cooperation and integration through the creation of specialized institutions which took them years to achieve their final goals and objectives.

In the banking sector, the EEC countries started their cooperation by implementing the Directives of 1973 conforming to Article 57 of the Rome Agreement which stated that all EEC financial institutions be treated in the same way as corresponding national institutions. This was followed by another Directive in 1977 which laid down more comprehensive guidelines leaving only some implementation arrangements for appropriate future decisions. Additionally, some EEC countries have taken local initiatives in establishing regional banking institutes for the training of banking personnel; while one of the most significant steps on the route of cooperation was the formation in the year 1982 of the European Federation of Bank Associations representing all National Bank associations from all Common Market countries.

It is, therefore, our belief that GCC countries, with their structures and common characteristics, can greatly benefit from the experience of EEC countries in the banking sector. It is possible for GCC countries to adopt the same course of action to enhance the process of cooperation in the banking sector without waiting for an agreement between member countries on full economic and monetary integration. This is particularly, so because the overall aim, objectives and various forms of activities in the process of integration were clearly specified by the GCC Constitution and the Articles of the United Economic Agreement.

The proposed cooperation and integration measures in the banking sector can take the form of the harmonization and coordination of the condition for licensing and other forms of Gulf banking laws and regulations. It is also possible to establish a Gulf credit information system, which can initially be applied locally on national level followed by region-wide application. In addition, appropriate incentives and support can be granted to the private sector, which actively contributes to the process of Gulf banking cooperation.

To initiate the process, it is possible to open a dialogue between the following parties:

  • National Commercial Banks
  • National Public Sector Credit and Investment Banks
  • Monetary authorities represented by Central Banks or Monetary Agencies.

Such dialogue would facilitate the exchange of ideas and the presentation of the views of these banking institutions on the subject of Gulf banking cooperation to the competent authorities of the member countries as well as consultations with other related organizations such as federations and chambers of commerce and industries to benefit from their wide ranging experience in the various sectors.

GCC countries can also establish a federation of Gulf Banking Associations to represent all national banking associations similar to the experience of the European Common market. The creation and existence of such federation can facilitate a direct and continuous dialogue with the Monetary Authorities and General Secretariat of the GCC in the interest of Gulf banking cooperation.

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Dec 26, 2021

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