ARAB BANKER SAYS TOO SOON FOR SINGLE CURRENCY Gulf Arab states must coordinate economic policies more closely before moving towards their goal of a unified currency system, the President of the Arab Bankers Association said. Hikmat Nashashibi told a news conference at the end of an Arab currency traders meeting: "We have to start with coordination of fiscal policies as a prerequisite for a common system of currencies ... There is quite a substantial way to go yet." He said only then would a unified Gulf currency system be a plausible project. The six nations of the Gulf Cooperation Council -- Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the United Arab Emirates -- have held a series of meetings this year to examine linking their currencies to a single peg in a system which bankers say could be modelled on the European Monetary System (EMS). At present, five currencies are linked either officially or in practice to the U.S. Dollar, while the Kuwaiti dinar is pegged to a trade-weighted basket of currencies. A common currency system or EMS-style "grid" would, in theory, foster regional trade by providing a basis for stable exchange rates, but Nashashibi said inter-Arab trade is at a very low ebb and capital flows between Gulf states remain small. "Capital markets in the Arab world are still in their infancy," he said. Nashashibi said lack of experience among Arab banks, a paucity of financial instruments and a legal framework that often does not recognise the western banking concept of interest have hampered the growth of Arab markets.