ABSTRACT
One of the unique stylized facts about the Gulf Cooperation Council (GCC) region is the existence of monetary authorities such as Saudi Arabian Monetary Agency (SAMA) in which the domestic treasuries deposit the foreign exchange revenues accruing from oil. The monetary authority generally issues local currency which it sells to the treasury in return for foreign exchange. The government then finances its domestic expenditures with the local currency purchased from the monetary authority. Another unique characteristic of the region is the rapid multiplicity of monetary institutions that sprang up following the rise in oil revenues. Actually Bahrain and Kuwait are now performing most of the elaborate functions of international financial centres. The money and credit data presented here are primarily derived from the publications of the local monetary authorities and monetary institutions. They are generally reliable and consistent. One area of notable weakness however, is that pertaining to foreign assets.
