GCC central Bank Assignment Example | Topics and Well Written Essays - 1500 words

GCC central Bank - Assignment Example The objectives of the Central bank and the proposed functions of the Central Bank in GCC have been proposed to uphold the best interest of the Gulf economy. Introduction The banking industry of Gulf Cooperation Council is based on then six main GCC countries- Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the United Arab Emirates. The GCC central bank is likely to face new opportunities and challenges as the Gulf countries experience major changes in the economic and demographic sectors. The banking industry in the Gulf countries is majorly evolving with the market being majorly transformed and driven by consumer demands. A major shift is noted in the industry creating a diverse customer base for the banks which will include an increasing number of women and youth. The central bank should shift to more customer centric approach to create value for the customers and implement a model which provides a higher level of service for the customers. The global banking industry encourages the banks in GCC to achieve high performance levels by implementing new strategies like: Capturing the growth opportunity in the changing regulatory environment, strengthening the existing distribution network and creating new distribution networks using up to date technologies, develop and nurture talent to retain good talent within the organizations, use customer analytics based in predictive analysis models and streamline the operating model with the strategic objectives of the organization. The GCC central banks are likely to gain more by focusing on the retail segments and strengthening their distribution networks. In the light of globalization, it is critical for the GCC banks to re-evaluate their operating models so as to ensure sustainable profitability and increasing operational performance. Discussion Recommended Structure of the Central Bank for GCC The structure of the Central bank for GCC should be based on a more market oriented approach than an organization oriented appr oach. There exists a high degree of concentration in the GCC baking industry and there are strict restrictions on the entry of foreign banks in the GCC market. The banking system prevalent in GCC vary based on the size and operations of the banks (Berger, 1995, p.444). Also, the operating environment for commercial banks and Islamic banks is different due to different financial and institutional conditions prevailing in the area. The major structural factors that drive the prospects of development of the GCC bank are the increasing competitiveness in the domestic banking markets, efficient corporate debt markets, use of compliant financing as an important strategy, efficient local equity markets, increasing investments from private institutions and increased use of derivatives and other financial instruments. The structure of the GCC central bank should be heterogeneous based on banking, equity and debt. As the industry is largely concentrated, a greater control on the banking asset s is required by the GCC central bank. The bank has to formulate policies with reference to the fact that the liquidity factors the lending rates are majorly influenced by the oil prices (Rousseau, 1998, p.1162). The banking institution should be primarily dominated by