KARACHI, April 23: The Economic Cooperation Organisation (ECO) may decide to establish a central bank for member countries to facilitate trade and promote investments.

Heads of central banks of seven ECO member states held a meeting in Karachi on Monday to discuss various ideas for promotion of trade and finance among member countries.

Governor, State Bank of Pakistan, Dr Shamshad Akhtar, said that the meeting discussed the idea of establishing a central bank for the ECO.

He expressed the hope that a favourable decision would be made about the ECO Central Bank.

“I propose we launch today an ECO Central Banks Network (ECBN). This network could focus on (i) exchange of experiences and information on economic and monetary policy approaches and banks regulation and supervision to learn from each other; (ii) nurture greater cross-border cooperation of financial flows, including possibilities of cooperation on anti-money laundering and (iii) explore opportunities for harmonisation of standards and systems, where feasible,” said the governor in her welcome address.

She said the region has about 400 million people, a land mass of about 8 million square kilometers which offers fertile land and rich natural resources and a substantive market.

If average economic growth of the region is 6.2 per cent, the real GDP in the region will be an aggregate $800 billion.

The region is a home of eight per cent of the world’s crude oil production and 9.2pc of global natural gas production, she added.

This was the first meeting of the heads of the central banks of ECO member states. Those who participated in the meeting were heads of central banks of Pakistan, Afghanistan, Iran, Azerbaijan, Turkmenistan, Kyrgyzstan and Turkey.

“The purpose of the meeting is to promote investment and trade and in this background we are thinking to lay the foundation of central bank for the member countries,” said Dr. Akhtar while talking to media after the meeting.

The governor said that the Trade and Development Bank will start working by the mid of this year.

The first meeting to establish ECO Trade and Development Bank was held in April 2004 in Ankara, Turkey. The representatives of Iran, Turkey, Pakistan and ECO Secretariat participated in the meeting.

The first meeting of the board of governors of ECO Trade and Development Bank (ECOTDB) was held on July 6, 2006, in Ankara. The meeting was attended by designated governors of all the three member states -- Iran, Pakistan and Turkey.

However, the Trade and Development Bank could not be made functional. The governor said it would start functioning after a couple of months.

The fundamental objectives of ECO include promotion and liberalisation of intra regional trade, gradual movement towards integration of all regional economies to the world, developing transport and communications infrastructure, mobilising and utilising the regions natural resources and capitalising on its agricultural and industrial potential.

However, the trade among the member countries is far below the high expectations being announced whenever a meeting of ECO is held.

When asked about the low return to depositors by the banks, the governor said banks have increased returns on fresh deposits.

She said she advocated and encouraged banks for competitive rates for both the borrowers and depositors.

The governor had promised by the end of last year that she would intervene to provide positive returns to depositors. However, the real return to deposits is still negative as average main inflation is eight per cent and the banking spread is 7.4 per cent.