Kuwait parliament’s foreign relations committee yesterday approved the Gulf Cooperation Council (GCC) monetary union pact, the head of the committee said. MP Marzouk Al-Ghanem told reporters the panel’s decision paves the way for Kuwait’s parliament to ratify the pact. Parliament starts its term in late October.
Kuwait is one of four GCC members which in June signed an accord to create a joint monetary union council, a prelude to establishing a Gulf central bank and launching a monetary union and single currency. OPEC kingpin Saudi Arabia, Qatar and Bahrain also signed the pact, while the remaining two members, the United Arab Emirates (UAE) and Oman, did not sign.
The UAE was upset at the selection of the Saudi capital Riyadh to host the future GCC central bank, while Oman withdrew from the monetary union saying it was not ready to meet the preconditions. Kuwait is due to host the forthcoming GCC annual summit in December. The GCC states have set 2010 as the target to launch the monetary union and single currency, but many experts believe that target is too ambitious.
In another development, the Kuwaiti cabinet has decided to establish a new Islamic bank with three quarters of its shares offered free to citizens, the official KUNA news agency reported yesterday. The Warba Bank, the fourth Islamic bank in the oil-rich emirate, will have a capital of KD 100 million in which the state-run Kuwait Investment Authority, the sovereign wealth fund, will own 24 percent.
The remaining 76-percent stake worth 265 million dollars will be distributed equally to the 1.1 million Kuwaitis with the government footing the bill. The decision, taken by the cabinet late on Monday, comes on the eve of the Muslim feast of Eid Al-Fitr next week, for which the government has allocated a full one-week public holiday.
Kuwait already has three Islamic banks, including Kuwait Finance House, one of the world’s largest Islamic banks. It has also given approval to a conventional bank to become Islamic. In addition, the emirate has seven conventional local banks and branches for six international and Gulf banks.
The foreign banks include world banking giants BNP Paribas, Citibank and HSBC, besides Abu Dhabi National Bank of the United Arab Emirates and Qatar National Bank. Qatar’s Doha Bank and Saudi Arabia’s largest bank Al-Rajhi have been granted licenses to operate in the emirate, which opened its doors to foreign banks in January 2004