CENTRAL BANK FOR GULF COOPERATION COUNCIL Name Institution Executive summary The gulf region has been in a union since 1981 and tackles its major problems collectively as a region. However the issue of unifying the currency and operating from a central bank seems not to work well for the members, with some of them withdrawing from the union…
Low education levels as well as underdevelopment are also a common feature in these countries and thus making them depend on foreign labour. In a strive to improve their economy, the GCC countries have tried to diversify their economic activities after realizing that the natural resources are in the process of getting depleted and therefore inculcated capital intensive projects (Cobham & Ghassan 2011). Although most investments are done nationally, it is evident that all these countries have a common goal and thus face a common problem of acquiring capital. In response to this the financial sector, which plays a critical role in economic diversification, the GCC countries have taken the initiative to develop it. The development of financial sector has been done individually with each country operating guided by its own principles. However in2009, the central bank of the GCC was proposed that would collectively operate across the whole GCC region. The GCC banking system is more of a web of different structures and situations rather than a homogeneous block. This is contrary to all other economic activities that tend to be common. It is to this reason that the central bank was formed (Cobham & Ghassan 2011). . ...
However the location of the central bank of GCC is completely different from that of the European central bank. This creates a doubt on the overall efficiency of the proposed GCC central bank. it therefore deems necessary to understand the banks functions and objectives as well as its pros and cons, that is sources of failure as noted by other people. Discussion Structure The proposed GCC central bank will be a central bank for a common currency to be established in the GCC region. Its capital stock will be owned by the central banks of the major countries, dividing it according to their GDP ratios. Since the bank has not been established yet, its headquarters have not been stated clearly. As the GCC is located in the Arab region with almost every member country being Muslim dominated, then the bank has to take into consideration the Muslims way of living in addition to pursuing its usual activities. Relation with European Central Bank Being a multinational financial institution, the proposed GCC central bank portrays several similarities with the European central bank. Firstly, the formation of the bank aims at unifying the currency for the member states. However, there are debates that the GCC region might not be ready for a common currency. The main retardant to attaining the common currency, which also acts as the major difference between the location of the ECB and the GCC central bank is the lack of the political consensus in the latter. A common currency requires a set of common rules and regulation to prevent inflation and other economic disasters that result from inappropriate money supply trends (Cevik, Teksoz & International Monetary Fund 2012). Self-adjusting mechanism has been seen to fail after the 2008 ...
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In the forex market, the bank may purchase foreign currency using domestic currency to keep inflation and deflation in check (Basu, 2009; Topnews, 2011). This helps in valuing or devaluing a particular currency in case of need. To increase the value of a currency, the central bank will buy the currency and hold huge quantities of it in its reserves thereby reducing its supply in the market.
Central banks conducts monetary policy through regulating money supply and interest rates. The main objectives of the monetary policies of the central bank are to keep inflation under control and unemployment rate low with a view to stimulate economic growth. The autonomy of central banks insulates their operations from political intervention.
Generally it looks after the policy formulation process and how it concentrates on the growth strategies which will drive the GCC countries on the path of progress. Introduction Gulf of Cooperation Council (GCC) countries have many things in common. All of the GCC countries are major oil exporters and they have fixed exchange rate regimes which exposes them to the risk of international oil prices.
Unlike any straight forward banking system, this has to integrate all most of the characteristics of all its affiliates to promote efficiency and effectiveness in banking within the region. The structure would therefore be quite different from those of single country central banking systems.
The formation of the Central Bank includes a study of the probable form or structure of the Central Bank in GCC. The operations of the Central Bank in GCC have been compared to the operations of the European Central bank based in Frankfurt, Germany. The arguments in favour and opposing the formation of the Central Bank have been provided in this piece of work.
They also offer financial services to potential investors both from the local and foreign market. However, the banking sector among the Islamic states still remains to be underdeveloped and lags behind in
The two will see the formulation of financial policies in the region that will help deal with the issue of inflation and interest rates. This is bound to give the oil rich region more control over their economy and balance trade within
cts including its structure, similarities or differences from the European Central Bank and arguments along with counter-arguments against GCC Central Bank will be duly considered for discussion in this assignment.
In relation to the above context, it can be apparently observed
Hunger issues have been bedeviling Americans since the year 2008 when the recession kicked in. Eight years later the issue is still to be addressed thou statistics indicates that the number of people faced
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