The United Arab Emirates’ monetary authority rolled out measures to bolster the resilience of the nation’s banks, as Gulf economies move to cushion potential fallout from escalating tensions involving Iran.
Under the package, banks will be given enhanced access to reserve balances up to 30% of the cash reserve requirement, the Central Bank of the United Arab Emirates said. Lenders will also be able to secure term funding in both dirhams and US dollars.
The regulator said UAE banks already maintain substantial buffers. The overall stock of liquidity held with the central bank, alongside eligible assets for its operations, is close to $250 billion. Of that, banks’ reserve balances alone account for more than $109 billion.
“The UAE’s financial system has demonstrated resilience during the current extraordinary circumstances affecting the global and regional markets without any material impact on the banking sector’s health and payment systems,” the CBUAE said in a statement.
Details:
- Monetary Policy Measures: Enhanced access to reserve balances up to 30% of the cash reserve requirement and availability of term liquidity facilities in both AED and USD.
- Liquidity and Funding Relief: Temporary relief in liquidity and stable funding ratios to provide banks with greater flexibility to support the UAE economy.
- Capital Buffer Relief: Temporary release of the Countercyclical Capital Buffer (CCyB) and Capital Conservation Buffer (CCB) to support the UAE economy.
- Credit Risk Management: Providing flexibility to banks to postpone classification of individual and corporate loans for customers affected by the extraordinary circumstances.
- Additional Support: In view of the extraordinary circumstances, and considering the aforementioned support, the CBUAE affirms that banks should continue to provide the required financing services to support their customers and the national economy.
- Click here for the CBUAE statement
