Headed by Mansour bin Zayed… The Board of Directors of the Central Bank reviews the strength and durability of the financial system and banking sector in the UAE, and adopts a proactive support package to enhance the flexibility of financial institutions supported by the Central Bank’s assets equivalent to 1 trillion dirhams.

Abu Dhabi, 17 March / WAM / Under the chairmanship of His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President of the UAE, Deputy Prime Minister, Chief of the Presidential Cabinet, and Chairman of the Board of Directors of the Central Bank of the United Arab Emirates, the Board of Directors of the Central Bank held its second meeting for the current year, today, where it reviewed the strength of the financial system in the UAE, which has shown a high degree of resilience in light of the current exceptional circumstances affecting global and regional markets, without any fundamental impact on the integrity of the banking sector and payment systems.

The meeting was attended by the Vice Chairman of the Board of Directors, His Excellency Abdul Rahman Saleh Al Saleh, and His Excellency Jassim Mohammed Buataba Al Zaabi, along with His Excellency Khaled Mohammed Al Amma, Governor of the Central Bank. The meeting was also attended by members of the Board of Directors: His Excellency Younis Haji Al Khouri, His Excellency Sami Dhaen Al Qamzi, and His Excellency Dr. Ali Muhammad Al Rumaithi, in addition to Their Excellencies the Governor’s Assistants: Ahmed Saeed Al Qamzi, and Ibrahim Al Sayed Muhammad Al Hashimi.

In continuation of its proactive approach, the Council adopted a comprehensive proactive support package to enhance the flexibility of financial institutions, aiming to support the stability and robustness of the banking sector in the country in light of the exceptional global and regional circumstances. The Central Bank, which supervises record foreign exchange reserves exceeding 1 trillion dirhams (270 billion US dollars) and a coverage ratio of the monetary base of 119%, emphasized the solid foundations of the banking sector in the country, which amounts to 5.4 trillion dirhams.

The total volume of liquidity held by banks in the Central Bank, in addition to their net eligible assets within the traditional operations of the Central Bank, amounted to approximately 920 billion dirhams (250 billion US dollars), including bank reserve balances, which exceed 400 billion dirhams (109 billion US dollars).

The package includes five main axes that allow banks to access cash liquidity, and provides them with additional flexibility to use surplus liquidity and capital reserves, which contributes to supporting the UAE’s economy:

The first axis: Monetary policy measures: enhancing access to reserve balances up to 30% of the mandatory reserve requirements, and providing forward liquidity facilities in dirhams and US dollars.

The second axis: Reducing liquidity and financing requirements: Temporarily reducing liquidity ratios and stable financing ratios to give banks greater flexibility to support the economy.

The third axis: Reducing capital buffer requirements: Reducing cyclical buffers and capital buffers (CCB) to support the economy.

Fourth Axis: Credit Risk Management: Giving banks flexibility to postpone classification of individual and corporate debts to provide temporary facilities to banking sector clients affected by exceptional circumstances.

The fifth axis: Providing additional support: In light of the exceptional circumstances and taking into account the support provided, the Central Bank stresses the need for banks to continue providing the necessary financing services to support customers and the national economy.

The Board of Directors expressed its readiness to use all available monetary policy tools to protect the stability of the financial system. It also continues its commitment to preserving the financial sector’s contribution to achieving the national vision and enhancing its global competitiveness.

During the meeting, His Highness Sheikh Mansour bin Zayed Al Nahyan stressed that the insightful vision of the wise leadership is the primary guarantor of the strength and stability of the financial system in the country. His Highness said: “The precautionary policies and proactive supervisory frameworks adopted by the Central Bank have proven their worth in enhancing the readiness of the financial and banking sector and maintaining monetary and financial stability. These record results come to translate sustainable confidence and global competitiveness into our national economy, and consolidate the UAE’s position as a leading global financial centre.”

• For more: Follow Khaleejion 24 Arabic, Khaleejion 24 English, Khaleejion 24 Live, and for social media follow us on Facebook and Twitter