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Tue 20 Jan 2009 05:03 PM

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GCC 'to focus on local markets' amid crisis

Region needs to become more integrated as it moves towards monetary union - DIFC chief economist.

The GCC “needs to protect its assets” and focus on local financial markets in the wake of the global economic downturn, Dubai International Finance Centre’s (DIFC) chief economist said on Tuesday.

“This is the time for us to build our banking and financial centre. This is the time for us to build our own capital markets,” Nasser Al Saidi commented at The Economist's 'The World in 2009' forum in Dubai.

Al Saidi said that the GCC has the opportunity to develop a “new financial architecture", and should “grow its markets and become more closely integrated”, as it moves towards a Gulf monetary union.

A common currency, which is supposed to be introduced in 2010, would create “greater harmonisation”, he said

It would also allow GCC countries with budget deficits to acquire finance within the GCC in the common currency, he noted.

Gulf leaders signed a monetary union agreement at the end of December in Oman.

“The GCC markets have never been through a financial crisis and they’ve never had a real estate cycle,” Al Saidi noted.

“As a result of that it not surprising that on the policy side the tools were not there to address the contagion."

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