Chaired by His Highness Sheikh Mansour bin Zayed Al Nahyan, the Deputy Prime Minister and Head of the Presidential Office, the Board of Directors of the Central Bank of the UAE convened for its second meeting of the year today. The meeting reviewed the robustness of the financial system in the UAE, which has demonstrated a high level of resilience amidst the exceptional conditions affecting global and regional markets, without any significant impact on the integrity of the banking sector and payment systems.
The gathering was attended by the Vice Chairmen of the Board, H.E. Abdul Rahman Saleh Al Saleh and H.E. Jassim Mohammed Buataba Al Zaabi, along with H.E. Khaled Mohammed Balama, the Governor of the Central Bank. Other board members included H.E. Younis Haji Al Khouri, H.E. Sami Dahi Al Qamzi, and H.E. Dr. Ali Mohammed Al Rumithi. Additionally, assistant governors H.E. Ahmed Saeed Al Qamzi and H.E. Ibrahim Saeed Mohammed Al Hashimi were present.
Continuing its proactive approach, the Board approved a comprehensive support package aimed at enhancing the resilience of financial institutions, which is designed to maintain the stability and robustness of the banking sector in light of exceptional global and regional circumstances. The Central Bank, which manages record foreign currency reserves exceeding AED 1 trillion ($270 billion) and a coverage ratio of 119% for the monetary base, emphasized the solid foundations of the country’s banking sector, which is valued at AED 5.4 trillion.
The total liquidity held by banks at the Central Bank, along with their net qualified assets within traditional operations, stands at approximately AED 920 billion ($250 billion), including bank reserves, which exceed AED 400 billion ($109 billion).
The support package comprises five main pillars that facilitate banks’ access to liquidity and provide additional flexibility in managing surplus liquidity and capital reserves, thus contributing to the support of the UAE economy:
Pillar One: Monetary policy measures: Increasing access to reserve balances up to 30% of the mandatory reserve requirements, and providing liquidity facilities in both AED and USD.
Pillar Two: Reduction in liquidity and funding requirements: A temporary decrease in liquidity ratios and stable funding ratios to give banks greater flexibility to support the economy.
Pillar Three: Lowering capital buffer requirements: Reducing countercyclical buffer requirements and the Capital Conservation Buffer (CCB) to bolster the economy.
Pillar Four: Credit risk management: Allowing banks the flexibility to postpone the classification of individual and corporate debts to provide temporary assistance to clients affected by exceptional circumstances.
Pillar Five: Additional support: In light of the extraordinary conditions and the support provided, the Central Bank stresses the importance of banks continuing to offer necessary financing services to support clients and the national economy.
The Board expressed its readiness to utilize all available monetary policy tools to safeguard the stability of the financial system. It remains committed to ensuring the financial sector’s contribution to achieving national vision and enhancing its global competitiveness.
During the meeting, His Highness Sheikh Mansour bin Zayed Al Nahyan emphasized that the visionary leadership is the cornerstone of the robustness and stability of the country’s financial system. He stated: “The precautionary policies and proactive regulatory frameworks adopted by the Central Bank have proven effective in enhancing the readiness of the financial and banking sectors and maintaining monetary and financial stability. These record results reflect the sustainable confidence and global competitiveness of our national economy, solidifying the UAE’s position as a leading global financial hub.”