Some Trends in Banking Law and Their Relevance to the GCC States
![handle is hein.journals/arablq13 and id is 311 raw text is: SOME TRENDS IN BANKING LAW AND THEIR
RELEVANCE TO THE GCC STATES*
Ibrahim F.I. Shihata**
INTRODUCTION
The banking industry and the rules and procedures which regulate it in the world's
major financial centres have undergone important changes in recent years. Such
changes have yet to be absorbed fully in the banking laws and regulations of most
developing countries, including the countries that are members of the Gulf
Cooperation Council (GCC).
This article will first describe some of the key factors that have led to changes in
banking laws and regulations. It will explain how new trends are reflected in
current practice and how a good banking law may cope with present and future
requirements. Following this, the article will provide an overview of the legal
implications of four recent developments of special importance in the financial
sector. The article concludes with a brief review of the status of the GCC laws in
this vital sector and some observations on the extent to which these laws meet the
requirements imposed by these recent trends.
EVOLUTION OF BANKING LAW IN A MORE COMPETITIVE
ENVIRONMENT
World trade grew by 18 per cent in real terms in the two year period of 1994-1995.
Cross border private flows amounted to $2.4 trillion in the same period. The stock of
international bank deposits, net of redeposits, increased by $766 billion in these two
years, reaching a total of $4.6 trillion at the end of 1995. Growth of interbank
lending, at the average rate of 15 per cent per year since the mid-seventies, has been
much faster than the average growth rates of both real output (3.2 per cent) and
international trade (5 per cent). Turnover in the foreign exchange market has
reached an estimated $1.2 trillion a day, six times as much as it was a decade ago and
* This article is based on a paper presented at the 3rd GCC Banking Conference 1996, Bahrain, 26-27
October 1996. It has been submitted to the Arab Law Quarterly in December 1996 and not been
updated since then.
** Senior Vice President and General Counsel, World Bank; Secretary-General, International Centre
for Settlement of Investment Disputes. The views expressed in this article are the personal views of the
writer and should not be attributed to the institutions he works for.
Arab Law Quarterly, [1998] 303-335](ViewImageLocal?handle=hein.journals/arablq13&div=30&collection=&method=preview&ext=.png&size=3)
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Some Trends in Banking Law and Their Relevance to the GCC States
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