After four years of serving primarily as the passive providers of capital for world money markets, the central bankers of the Arab nations are preparing to take a more active role in the world of international finance.

The governor of the Central Bank of Jordan. Said Nabulsi, who was chairman of last week's conference of Arab central bank governors in Ammaw, told The Washington Post in an interview here this week that the conference was convened to tackle one specific issue - how to bring about a more or less unified and integrated capital market transcending national frontiers throughout the 22 states of the arab world.

"We want to see how we can promote, enhance and integrate the individual capital and financial markets of the Arab states into one market without barriers on the Pan-Arab level," Nabulsi said, "but such a process is very wide in its scope and has many facets including the adequancy of existing commercial banking systems, investment compaines, stock exchanges, the free flow of capital and repatriation of profits among Arab states, the use of sophisticated financial instruments, the ability to undertake feasibility studies to identify good investiments, the easy movement of money to facilitate trade, and the activities of central banks and development funds and authorities in providing development assistance to chronically deficit Arab countries."

The three-day conference attended by central bank governors and officials from every Arab state except Oman was faced with such a staggering scope of work that it has formed a six-nation committee to look into precisely where the priorities are for bringing about long-term integration and coordination among Arab capital markets.

It will report to the second annual conference of Arab central bankers scheduled for next March, but areas that last week's pioneering meeting identified as critically important include the provision of favourable investment climates, the establishment of a federation of Arab stock exchanges "of which there are six in operation and a seventh to open in Sudan soon."

The strengthening of Arab commercial banking capabilities, the development of indigenous expertise in drawing up detailed feasibility studies, the investigation of needs to establish new financial institutions such as merchant banks and underwriting companies, and the scope for setting up more joint venture investment companies or consortia banks, either wholly among Arab interests or in conjunction with foreign firms, on the line of the several successful consortia banks now based in Europe and including significant Arab shareholdings.

"We would like to see the Arabs develop into intermediaries in the international capital markets instead of only being suppliers of capital," Dr. Nabulsi said. "but we are very aware of the fact that the development and growth of Arab financial sophistication and expertise, should not be at the expense or to the detriment of other capital markets or to Arab capital itself."

He emphasised that "the natural cautiousness of capital" will mean that surplus oil producers will want to be very sure of the confidence and strength of Arab capital markets before they start switching some of their deposits in Eastern banking centers back into the Arab worlds banking and finance system. But he was also emphatic that the central bankers at last week's conference all wanted to see more recycling of petrodollars via the intermediation of Arab banks and financial institutions, including the consortia institutions, including the consortia banks based outside the Arab world.

One idea now being considered. Dr. Nabulsi revealed, is the establishment of some sort of "permanent or standing syndicate" of Arab bank branches abroad and consortia banks with Arab shareholdings. This would be more effective, he said, in allowing Arab interests to take a bigger share of the capital markets lending and recycling business.

One area that will receive priority attention in the coming months is the drafting of a unified investment promotion and protection code to be applied throughout the Arab world, Dr. Nabulsi said. This was require "to revitalise the receiving end" of Arab capital transfers, by encouraging and facilitating the flow of money among and between Arab states, particularly on the private level the code would have to include incentives such as tax holidays and exemptions, as well as "a minimal guarantees against commercial and noncommercial risks", Dr. Nabulsi said. The Arab Leauge is already working on drafting such a code, which would likely give advantages to Arab investors that would be greater than those now offered to non-Arab foreigners in many Middle East countries.

The central bank governors are working on the concept of what Dr. Nabulsi calls "an Arab economic citizenship", which would provide for equal treatment of Arab investors in all Arab states and financial institutions.

Dr. Nabulsi estimated very roughly that the annual flow of inter-Arab capital during the coming few years would not exceed ten billion dollars, but with the increasing sophistication of Arab financial capabilities and the creation of Arab financial capabilities and the creation of an integrated capital market covering the twenty-two Arab states the volume of money that could be handled by Arab institutions, serving clients in the Arab world and internationally, could easily grow to fifty billion dollars.