Gulf countries moved a step closer to monetary union on Tuesday with a decision to base a planned future central bank in the Saudi capital Riyadh.

The six-member Gulf Cooperation Council decided at an informal summit in Saudi Arabia that Riyadh would host the region’s future banking authority, GCC secretary general Abdurrahman al-Attiyah told a news conference.

However, Attiyah said after the day-long summit that the group has pulled back from the target of creating a common currency by 2010.

“No timetable has yet been established for monetary union,” he said.

Attiyah said the first step toward creating a Gulf central bank would be the establishment of a Riyadh-based monetary council, which would exist during a “transitional phase” in the move toward monetary union.

Asked to confirm if that meant the the central bank would also be based in the Saudi capital, Attiyah replied: “Of course, the central bank will be in Riyadh.”

Bahrain and the United Arab Emirates had also been considered in the running to host the new banking authority for the region, which controls a large share of global energy supplies and has a population of more than 36 million. But in the end it fell to Saudi Arabia, which while not a banking centre like Bahrain, Kuwait or the United Arab Emirates, is the by far the world’s biggest oil supplier and the Gulf’s largest economy.

Attiyah gave no timetable for the next step of forming the monetary council. Originally the goal was set for 2010, but analysts consider that unrealistic, given the global economic slowdown. Attiyah also confirmed that the planned single currency will involve just five of the six GCC members after Oman announced in 2007 that it would not join the scheme.

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