Eurosystem and GCC central banks and monetary agencies hold high-level seminar

The Eurosystem – comprising the European Central Bank and the 15 national central banks of the euro area – and the central banks and monetary agencies of member states of the Gulf Cooperation Council (GCC) ^[1] held a high-level seminar on 12 March 2008 in Mainz, Germany. The seminar, hosted by the Deutsche Bundesbank, was attended by governors and high-level representatives of the Eurosystem and the GCC countries’ central banks and monetary agencies, as well as representatives of the European Commission and the GCC Secretariat General.

The purpose of the seminar was to further strengthen the dialogue and enhance relations between the Eurosystem and the central banks and monetary agencies of the GCC, which have intensified in recent years. The main issues addressed at the seminar pertained to recent economic developments in the GCC countries and the euro area and to the increasingly important role of the GCC countries in the global economy.

Welcoming the seminar participants, ECB President Jean-Claude Trichet emphasised the dynamic economic development in the GCC countries over recent years, which has turned the region into a pole of global economic growth.

In the opening remarks, Deutsche Bundesbank President Axel Weber stressed that the GCC region has emerged as a major player in international financial markets and is part of the international community’s approach to ensure an orderly unwinding of global imbalances

In his address, the Chairman of the GCC Committee of Governors and Governor of the Qatar Central Bank, Abdulla Bin Saoud Al-Thani, discussed recent progress and the challenges ahead in economic and monetary integration among the GCC countries.

Seminar discussions focused on the following main topics:

Seminar participants reviewed the dynamic economic development of the GCC countries over recent years, which has been characterised by buoyant real GDP growth and large fiscal and current account surpluses in the wake of high oil prices. They noted the robust dynamics of the private non-oil sector in the region and progress in economic diversification and financial sector development. Seminar participants exchanged views on the sources of inflationary pressures in GCC countries and policies to address them. They also discussed economic developments in the euro area.

Seminar participants noted the increasingly important role of the GCC countries in international financial markets, with the GCC region having emerged as a major net supplier of capital on a global scale, second only to East Asian countries. They also discussed the configuration of global current account imbalances, of which oil-exporting countries form a part, and the international community’s policy approach to ensure an orderly unwinding of global imbalances. Seminar participants also exchanged views on issues related to sovereign wealth funds (SWFs) given that the GCC region is home to some of the world’s largest SWFs.

The participants also discussed the GCC countries’ key role in international energy markets. It was noted that the region’s importance will further increase in the future given its endowment with large oil and gas reserves, combined with relatively low exploration and exploitation costs. At the same time, oil import dependency is expected to increase in mature and emerging market economies as a result of rising consumption and/or the depletion of domestic reserves.