Gulf states have to review their 2010 target for monetary union, Bahrain's central bank governor said on Thursday.

"We will have to revisit this timing," Rasheed Al-Maraj told reporters on the sidelines of a conference in Dubai.

Asked if Bahrain was still vying to host a regional central bank, he said the issue required further discussion.

Al-Maraj also said Bahrain was looking at issuing bonds and treasury bills, likely including Islamic securities, to help finance possible budget deficits.

"We have a programme with the Ministry of Finance to bridge deficits by issuing bonds and treasury bills," he said.

Al-Maraj said Gulf states are not facing a liquidity crisis and banks are in a position to take back their role in lending.

"The banking sector will be able to regain its vital role in lending," Maraj said, adding that banks were taking precautionary measures. "The impact of the crisis is limited. We will be able to absorb the impact." -Reuters