‘GCC countries maintained financial and monetary stability in the region’

Doha, Qatar: The Gulf Cooperation Council (GCC) countries have maintained financial and monetary stability in the region, said Governor of Qatar Centr...

Doha, Qatar: The Gulf Cooperation Council (GCC) countries have maintained financial and monetary stability in the region, said Governor of Qatar Central Bank (QCB) H E Sheikh Bandar bin Mohammed bin Saoud Al Thani.

Speaking during his participation in the first discussion session of Their Excellencies the GCC Central Bank Governors under the title ‘The impact of exchange rate policy on financial and monetary stability in the GCC Countries’, he noted that the fixed exchange rate policy is the most successful one for the GCC countries.

At the beginning of the session during the first edition of the first annual conference on enhancing joint Gulf cooperation within the GCC Central Banks Governors Committee, hosted by the State of Qatar, His Excellency added that each country has a specific policy regarding its national currency as it forms the basis of the economy of each country, so each country has its own economic nature that determines the adopted exchange policy, noting that most GCC countries adopted a fixed exchange rate policy that has proven successful, which is reflected in the benefits achieved, and it has led to financial and monetary stability.

Adopting this policy, he noted, attracted foreign capital, preserved domestic capital, mitigated fluctuations in the prices of imported materials and in inflation, and reduced the cost of major projects.  Considering the many benefits achieved thanks to the current exchange rate policy and comparing them with the challenges represented by the lack of independence of monetary policy, the benefits are much greater than the challenges that can be faced, the QCB Governor stressed, adding that the economies of the region need to impart knowledge regarding construction and technology, and all of these matters require policies that contribute to enhancing financial and monetary stability and attracting capital to the countries of the region. The current exchange rate policy has contributed to attracting investments and achieving economic diversification, and fixing the exchange rate has limited currency fluctuations and the associated risks, he said.

Adopting a specific exchange rate policy comes after an in-depth study of the economic structure of countries and infrastructure along with an assessment of the benefits that this policy will reap,he explained. Therefore, after reviewing all this data, it became clear that the fixed exchange rate policy is the most successful one for the Gulf countries, he said, stressing that adopting another exchange rate policy requires a change in the economic structure which takes years and decades and does not happen overnight, noting the International Monetary Fund’s praise for the success of the current exchange rate policy.