Confidence and competence are two words that should characterize any central bankers’ efforts. Sultan Bin Nasser Al Suwaidi has shown both as governor of the United Arab Emirates central bank since 1991, most notably during the past few years of accelerated change in the UAE and wider Gulf Cooperation Council (GCC) region.
Not only did Al Suwaidi play a pivotal role in rebuilding confidence in local and regional markets after the September 11, 2001 attacks on the United States – his lead on tackling “terrorist financing” and money laundering provided the model for a coherent regional approach – he has also taken a lead in launching the GCC’s planned monetary union, which is now less than four years off and will pose major challenges to the culture of discretion that traditionally surrounded state financial affairs in Arabia. Rulers have agreed that the new GCC central bank will be based in Abu Dhabi.
The UAE, like other members of the GCC, has moved a long way from the secrecy of the early 1990s. Al Suwaidi has played a crucial role in this process, for example by publicly discussing hot issues such as the case for abandoning the Gulf’s traditional dollar peg once the GCC single currency is launched. “It would not make real sense to have a single currency and keep it linked to a strong hard currency,” Al Suwaidi said in an interview with Emerging Markets. “By the year 2015, I think we should have a free-floating currency.”
In a region noted for its traditions of secrecy, Al Suwaidi has shown a refreshing readiness to explain delicate decisions, such as the plan to convert 10% of the UAE’s $29 billion foreign reserves from dollar to euro, which has helped to keep the lid on nervy speculation about political motives.
“It’s part of our normal diversification,” he told Emerging Markets. “The US dollar will remain the main currency for a long time. It’s a safe haven currency. The euro won’t take over – the investment opportunities are limited.”
Al Suwaidi’s credibility is bolstered by his direct track record of prompt action in dealing with issues that could threaten the Emirates’ financial standing, notably through a comprehensive tightening of supervision over international money transfers in response to fears about global terrorism financing after 9/11.
According to the governor, more than 10,000 people are involved in the fight against money laundering and terrorist financing in the UAE. “We have an army. We also have a mechanism – which is very important. We communicate across the UAE through the National Anti-Money Laundering Committee … The most important thing is to keep our eyes and ears open.”—Jon Marks