'We need to pay extra attention to retail commercial banking services, because such services touch on the day-to-day affairs of almost all citizens and residents of our region,' Al-Suwaidi said.

The governor also said that the door is neither open nor closed to issuing new licences to banks seeking to operate in the UAE. Currently, any bank capitalised above $50 million can apply for and receive a licence to set up a representative office and the central bank is in discussions about issuing authoritative licences.

Al-Suwaidi said the bank was continuing to develop its regulatory and supervisory framework. In early 2006, the bank will move toward implementing the provisions of Basel II, which sets international standards for risk management and capital adequacy, and will work on corporate governance, he said. It is also taking steps to unify IT systems across the banking sector. The central bank will complete the upgrade of its central fund transfer system, which will handle bulk transactions, by the end of 2006 and is developing an image cheque-clearing system to accelerate that process.

Commenting on the gcc common currency planned for 2010, Al-Suwaidi said the central banks had finalised the economic convergence criteria, supervision agreements, IT and technical issues and payments systems but political questions remain to be addressed such as the name of the new currency and the location of a monetary authority.