GCC central banks halt loans to public sector

Central Banks in Qatar, Saudi Arabia, Bahrain and Kuwait have stopped lending to the public sector with effect from January 1, 2010, the Peninsula has reported. The move is part of the plans of the four GCC states to set up a common monetary union. According to the draft GCC common monetary union agreement, the central banks of member-states are prohibited from lending to public companies to free a future regional central bank from its role of subsidising the public sector of member-states in line with the European model.