GCC to set up money transfer company

GCC states are setting up a company to facilitate direct money transfers among the six members, as the countries continue to strengthen financial co-operation within the region, which accounts for about a third of the world’s proven oil reserves.

The objective of the new firm, to be called the Gulf Payments Company, is to create a “safe and rapid means for financial transfers” in the region, Kuwait Central Bank governor Mohammad Al Hashel, said in a statement reported by state-run Kuwait News Agency, following the 69th GCC Committee of Governors of Monetary Agencies and Central Banks. Each member state country will contribute to the operating capital of the company to be headquartered in Riyadh, he said.

The Gulf Payments Company will allow states to transfer money “without reliance on international currencies”, Mr Al Hashel said at the summit on Monday.

The central bank governors from member states will sit on the board and a secondary office of the payments company will be established in the UAE, the region’s second-biggest economy, he said. The chief executive to run the new firm has already been selected, Mr Al Hashel said without elaborating when the entity will be operational.

“After that the company has to go out and borrow from the Gulf market or use the capital it has generated,” he said. No further details were provided.

The establishment of the new entity “should be seen purely in the context of forming a company to address the need of the member states in creating safe and rapid means for financial transfers among the GCC countries,” said Hettish Karmani, the head of research at U-Capital in Muscat.

“Such developments are important in enhancing co-operation and integration among the bloc’s monetary agencies and central banks in the wake of greater developments in the areas of fintech and changes in monetary policies globally.”

“This new entity is created to facilitate the trading between GCC countries,” said Mazen Alsudairy head of research at Al Rajhi Capital.

The central bankers on Monday also met Sheikh Sabah Al Sabah, the Emir of Kuwait, and discussed co-operation among GCC monetary institutions and banks, according to Kuna.

The regulators also addressed issues including combating money laundering and funding terrorism and formed a technical team for swapping financial techniques among the GCC member countries.