Lebanon’s Chief Banker Calls for Single Currency for Arab WorldWritten by Adam Gonn
Published Tuesday, April 13, 2010
Governor of the Bank of Lebanon says unified currency would boost intra regional trade
Lebanon’s top banker has called for a single unified Arab currency in use across the Middle East to help boost regional economy and development.
Riad Salameh, the Governor of the Bank of Lebanon, said the new currency should replace the US dollar or euro. Speaking at a conference in Beirut, Salameh was quoted as saying the currency should replace the foreign reserves currently held in national banks across the Middle East as this would free up liquidity and increase potential for economic growth.
“This is a very long term project,” Professor Louis G. Hobeika at Notre Dame University in Lebanon, told The Media Line,” It’s more like wishful thinking. …Realistically we would have to go through many steps and it may take a hundred years.”
Hobeika, who supports the idea of a common currency, argued that Salameh’s statements should best be seen as a political slogan than a viable plan. A major political decision would be required by all countries to get the process moving, he said.
Only 9 percent of all trade in the Middle East is intra regional and backers of the idea believe it could help increase this. According the Bank of Lebanon, in 2008 the Gross Domestic Product in Arab countries was $1.9 trillion. However, this represents only 3 percent of the global Gross Domestic Product that year.
Saudi Arabia for example, which has the largest proven oil reserves in the world and produces some 10 million barrels a day, has a relatively low GDP with just $379,500 million, far behind smaller countries like Turkey and Belgium.
The idea of a common regional currency, although on a more micro scale, has been underway for nearly a decade in the Gulf States. The six member nations of the Gulf Cooperation Council, including Kuwait, Saudi Arabia, Bahrain, Qatar, Oman and the United Arab Emirates, are examining launching a common currency.
However, despite years of negotiations and great similarities in the countries economies, all having oil and gas reserves generating budget surpluses, the 2012 launch date will not be meet.
Yadullah Ijtehadi, Managing Editor ABQ Zawya, explained that the region was not prepared for such an independent currency move.
“Gulf Central Banks don’t have the infrastructure and structures in place to abandon the dollar just yet,” Ijtehadi told The Media Line. “Money markets are nascent and the Gulf countries have stalled their monetary union, which could have been a way for them to slowly wean themselves away from the American dollar.”
“Oil is the biggest Gulf export and is priced in dollars. Until that changes, it is difficult to expect Gulf States to shift,” Ijtehadi said.
Copyright
2010 The Media Line. All Rights Reserved.
Have comments? Email editor@themedialine.org.
http://www.themedialine.org/news/news_detail.asp?NewsID=28562
Published Tuesday, April 13, 2010
Governor of the Bank of Lebanon says unified currency would boost intra regional trade
Lebanon’s top banker has called for a single unified Arab currency in use across the Middle East to help boost regional economy and development.
Riad Salameh, the Governor of the Bank of Lebanon, said the new currency should replace the US dollar or euro. Speaking at a conference in Beirut, Salameh was quoted as saying the currency should replace the foreign reserves currently held in national banks across the Middle East as this would free up liquidity and increase potential for economic growth.
“This is a very long term project,” Professor Louis G. Hobeika at Notre Dame University in Lebanon, told The Media Line,” It’s more like wishful thinking. …Realistically we would have to go through many steps and it may take a hundred years.”
Hobeika, who supports the idea of a common currency, argued that Salameh’s statements should best be seen as a political slogan than a viable plan. A major political decision would be required by all countries to get the process moving, he said.
Only 9 percent of all trade in the Middle East is intra regional and backers of the idea believe it could help increase this. According the Bank of Lebanon, in 2008 the Gross Domestic Product in Arab countries was $1.9 trillion. However, this represents only 3 percent of the global Gross Domestic Product that year.
Saudi Arabia for example, which has the largest proven oil reserves in the world and produces some 10 million barrels a day, has a relatively low GDP with just $379,500 million, far behind smaller countries like Turkey and Belgium.
The idea of a common regional currency, although on a more micro scale, has been underway for nearly a decade in the Gulf States. The six member nations of the Gulf Cooperation Council, including Kuwait, Saudi Arabia, Bahrain, Qatar, Oman and the United Arab Emirates, are examining launching a common currency.
However, despite years of negotiations and great similarities in the countries economies, all having oil and gas reserves generating budget surpluses, the 2012 launch date will not be meet.
Yadullah Ijtehadi, Managing Editor ABQ Zawya, explained that the region was not prepared for such an independent currency move.
“Gulf Central Banks don’t have the infrastructure and structures in place to abandon the dollar just yet,” Ijtehadi told The Media Line. “Money markets are nascent and the Gulf countries have stalled their monetary union, which could have been a way for them to slowly wean themselves away from the American dollar.”
“Oil is the biggest Gulf export and is priced in dollars. Until that changes, it is difficult to expect Gulf States to shift,” Ijtehadi said.
Copyright
2010 The Media Line. All Rights Reserved.Have comments? Email editor@themedialine.org.
http://www.themedialine.org/news/news_detail.asp?NewsID=28562