BEIRUT - Central Bank Governor Riad Salameh on Thursday urged Arab Central Banks to strengthen cooperation to reduce the negative effects of the global financial crisis.

"If we all work together then we can limit the effects of the financial crisis around the world," Salameh told participants in an Arab Business Forum in Beirut held at Movenpick Hotel. The event was organized by Confex International.

He proposed the creation of an Arab clearance department to facilitate all the payments between banks.

Salameh believes that this measure would enhance inter-Arab trade and allow each Arab state not to exhaust its foreign currency reserves.

He also suggested establishing a joint Arab financial market that would trade Arab stocks and bonds.

"We should also consider introducing Arab currencies to the foreign currency reserves of the Arab central banks which will eventually lead a uniform Arab currency," he added.

But some observers say that the creation of a joint Arab currency may be difficult to achieve, citing the example of the Gulf Cooperation Council which has failed to unite currencies despite talk of doing so since the 1980s.

Apart from Kuwait and some Arab states, most countries in the region peg their currencies to the US dollar.

Salameh also commented on the expansion of Lebanese banks in the Middle East. He said the revenues of Lebanese banks operating in the region represent 20 percent of total income.

Salameh hopes that this percentage will reach 40 percent within five years.

The 11 Lebanese banks that operate in the Middle East have a combined capital of $1.182 billion. Bank Audi, Blom, Byblos and Fransabank already operate in Syria, Egypt, Jordan, Iraq, Sudan and Algeria.

Lebanese banks decided to expand to the region six years ago to reduce their dependence on the small and very competitive Lebanese market.

But above all these Lebanese banks want to decrease their dependence on Lebanese treasury bills and Eurobonds in order to avoid further exposure to the public debt.

The revenues from T-bills and Eurobonds still represent the biggest chunk of the total revenues of Lebanese banks.

Kamal Shehadi, the chairman of the Telecom Regulatory Authority, seemed upbeat about the prospects of cellular privatization although the government plans to operate the networks for one more year through MTC Touch and Orascom Telecom.

Shehadi said that if the government privatized the two cellular networks and launched a third mobile networks, the penetration would jump to 60 percent within four years.

"This means that the number of subscribers will reach 2.6 million. The rates of the cellular calls will also fall by 30 percent," Shehadi said.

He added that the liberalization of the telecom sector in Lebanon would create more jobs and draw more investments into the country.

But the chances of privatizing the telecom sector in Lebanon in the near future seem very low due to the unfavorable market conditions around the world.

Other topics discussed at the forum included real estate and tourism. -Daily Star