Economic growth in the GCC countries has been high over the last decade and has been comparable to growth in the emerging markets and considerably higher than in the world at large. In order to maintain such growth, the GCC requires a developed financial sector based on strong regulatory institutions. For the moment, however, the GCC financial sector is characterized by a lack of bond and derivative markets, difficult access to credit for small and middle enterprises (SMEs), dominance of international banks in the project finance market, and heavily concentrated equity markets in terms of sectors and ownership. In order to overcome such present shortcomings in the GCC financial sector and to fully capitalize on the benefits of greater integration, the GCC states need to increase liquidity and diversity of their capital markets, facilitate cross-border trading of securities, foster a nascent institutional investor class and, above all, strengthen and unify regulatory frameworks. Together, this will be an important component of a more effective and stronger GCC union.