Gulf Petro-powers to Launch Currency in Latest Threat to Dollar Hegemony
THE TELEGRAPH: The Arab states of the Gulf region have agreed to launch a single currency modelled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate.

“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.

Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

The Emirates are staying out for now – irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman.

The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.

The project is inspired by Europe’s monetary union, seen as a huge success in the Arab world. But there are concerns that the region is trying to run before it can walk. >>> Ambrose Evans-Pritchard | Tuesday, December 2009

Islamic Banking Heads West
ARABIAN BUSINESS.COM: A.T. Kearney report reveals Islamic finance doubled in the past year.

A new report from A.T Kearney, a global strategic management consulting firm, revealed that Islamic banks are making their mark on the financial markets of non-Islamic countries. While shaira-compliant [sic] banking has traditionally focused on the GCC and Malaysia, there has recently been a dramatic increase in the number of Islamic banks outside the core markets: most remarkably in the UK, where the number of Islamic banks has more than doubled over the past 12 months.



At the same time, they're products remain popular in their core markets, where Islamic banks consistently outgrow their conventional competitors. Assets in the Islamic banking sector grew to over $250 billion globally in 2006, according to the U.K Treasury. In the GCC, this segment expanded to 15 per cent of the total system and is expected to reach 50 per cent within the next few years.



The success at home enables these banks to export their business abroad, as Islamic banks from the GCC are the major shareholders behind all of the newly set-up Islamic banks in the UK. However, the strategic approach they take on differs between there and their home countries. Islamic Banking Heads West >>> | May 5, 2008

A T Kearney >>>

The Dawning of a New Dark Age (Paperback - UK)
The Dawning of a New Dark Age (Hardback - UK)

UK

Incompetence at the Fed, or What? Dollar Could Come Under Even More Pressure if Gulf States Unpeg Their Currencies
TIMESONLINE: Foreign exchange markets are on alert this week for the embattled dollar to face a further, severe sell-off after key talks between the Middle East’s Gulf states that could lead to them scrapping their currencies’ pegs to the greenback.

Rulers of the six nations of the Gulf Cooperation Council (GCC) meet today and tomorrow in the Qatari capital of Doha amid significant pressures to sever their currency ties to the falling dollar, which is fuelling record inflation in their countries.

Officially, the GCC states have insisted that the key currency issue is not on the agenda for the rulers’ summit talks. However, there is intense speculation that mounting economic and social strains inflicted by the currency pegs could see them scrapped, or the Gulf currencies revalued, either at the meetings or within weeks of them.

Any move by five of the six GCC countries to follow a lead set by Kuwait in May and abandon their long-standing dollar pegs would add to already severe stress on the American currency, whose overall value on its broad trade-weighted index has plunged by nearly 12 per cent over the past two years, raising inflationary anxieties for the United States. Dollar faces new sell-off if Gulf states end greenback pegs >>> By Gary Duncan

Mark Alexander (Hardback)
Mark Alexander (Paperback)