Forty years ago banking in the Arab Gulf1 was insignificant; typically some foreign banks had branches in the Gulf to facilitate trade finance and to cater for a relatively small number of expatriate workers; local banks were scarce as subsistence agriculture dominated Gulf economies and the cash and barter society flourished; oil had not yet been exploited, nor the seeds of industry sown; only the Hijaz region of Saudi Arabia was the exception to this as the seasonal flow of pilgrims to Mecca and Medina took place each year; but financial needs in any case were limited to those required for trade and travel and most of these could be adequately provided by the money changers. Forty years ago there was not one central bank in the Arab Gulf; in 1952 the Saudi Arabian Monetary Agency (SAMA) was created, but it was not until 1968 that the Kuwaiti government established the next Gulf central bank and not until 1980 that the United Arab Emirates (UAE) eventually followed, setting up a central bank out of the turmoil of its defunct Currency Board and completing the establishment of regulatory authorities in all Gulf economies.
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Notes and References
- 1.Defined for the purposes of this book as members of the Gulf Cooperation Council (GCC), that is Saudi Arabia, Kuwait, United Arab Emirates, Bahrain, Qatar and Oman.Google Scholar
- 2.See, for example, S. Road, Oil — Expected Revenue Prospects for the Middle East (Committee for Middle East Trade, August 1989).Google Scholar
- 3.Not strictly an Islamic Bank but regarded as such by most of its depositors.Google Scholar