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GCC leaders choose Riyadh to host regional bank

 Arab gulf leaders from left to right, Kuwaiti Emir Sabah Al Ahmed Al Sabah, Qatari Emir Sheik Hamad bin Khalifa Al Thani, Omani Deputy Prime Minister...
 Arab gulf leaders from left to right, Kuwaiti Emir Sabah Al Ahmed Al Sabah, Qatari Emir Sheik Hamad bin Khalifa Al Thani, Omani Deputy Prime Minister...
 King Abdullah bin Abdul Aziz al-Saud of Saudi Arabia, right, welcomes the Emir of Kuwait Sabah Al-Ahmad Al-Jaber Al-Sabah, on his arrival for the Gul...
 King Abdullah bin Abdul Aziz al-Saud of Saudi Arabia, center, and second deputy prime minister Prince Nayef bin Abdul Aziz al-Saud, right, welcome Un...
 Members of a traditional Saudi honor guard with their golden swords wait for the arrival of Gulf Arab leaders as they arrive in the Saudi capital Riy...
 Arab gulf leaders from left to right, Crown Prince of Bahrain Sheik Salman Bin Hammad al Khalifa, United Arab Emirates Prime Minister and ruler of Du...

Mideast Saudi Arabia GCC Summit

Arab gulf leaders from left to right, Kuwaiti Emir Sabah Al Ahmed Al Sabah, Qatari Emir Sheik Hamad bin Khalifa Al Thani, Omani Deputy Prime Minister...

Mideast Saudi Arabia GCC Summit

Arab gulf leaders from left to right, Kuwaiti Emir Sabah Al Ahmed Al Sabah, Qatari Emir Sheik Hamad bin Khalifa Al Thani, Omani Deputy Prime Minister...

Mideast Saudi Arabia GCC Summit

King Abdullah bin Abdul Aziz al-Saud of Saudi Arabia, right, welcomes the Emir of Kuwait Sabah Al-Ahmad Al-Jaber Al-Sabah, on his arrival for the Gul...

Mideast Saudi Arabia GCC Summit

King Abdullah bin Abdul Aziz al-Saud of Saudi Arabia, center, and second deputy prime minister Prince Nayef bin Abdul Aziz al-Saud, right, welcome Un...

Mideast Saudi Arabia GCC Summit

Members of a traditional Saudi honor guard with their golden swords wait for the arrival of Gulf Arab leaders as they arrive in the Saudi capital Riy...

Mideast SAU GCC Summit

Arab gulf leaders from left to right, Crown Prince of Bahrain Sheik Salman Bin Hammad al Khalifa, United Arab Emirates Prime Minister and ruler of Du...

The heads of the six-nation Gulf Cooperation Council on Tuesday chose the Saudi capital to host the bloc's first regional central bank, a key step toward a long-elusive push for greater economic integration in the oil rich region.
Abdul Rahman Hamad al-Attiyah, the group's secretary-general, said Riyadh was chosen as the location for the region's monetary council, the precursor to the new central bank. He said details of the agreement would be released later.
The announcement marked a major step toward advancing the Gulf region's monetary union plan that also includes a unified currency. The effort, in the works for years, has stalled on a number of issues, including Oman's decision not to participate in the single currency and Kuwait's decision to drop the U.S. dollar as a currency peg.
GCC officials had set a target of 2010 for the new currency, but they have since acknowledged that this deadline would not be met.
Following a meeting in December, the bloc set the end of this year as a deadline for ratifying the charter of the monetary council, which would subsequently work to lay out a timeline for the establishment of a unified currency.
The announcement followed a meeting of representatives from the Gulf Cooperation Council, which includes Saudi Arabia, Qatar, Bahrain, Oman, Kuwait and the United Arab Emirates. Several of the countries had been vying to host the bank, including the United Arab Emirates.
Several factors set economic and political powerhouse Saudi Arabia apart from the other Gulf countries. The kingdom is the world's largest oil producer and has the region's biggest economy with an overall domestic product of about $470 billion. The de facto head of the Organization of the Petroleum Exporting Countries is also the only Arab member of the Group of 20 nations.
John Sfakianakis, chief economist at SABB, the HSBC Holdings PLC affiliate formerly known as Saudi British Bank, said "the world looks at the location (of the bank) as one of the political issues dividing the different member states."
But more important, he stressed, "is the issue of the power of the central bank, the charter of the central bank, the people who will man the central bank and ... the sovereignty of the central bank."
He also said the bank should have the "institutional capacity to do what it's supposed to do, which is to be a central bank of the region, not a mere institution."
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AP Business Writer Tarek El-Tablawy contributed to this report from Cairo.