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ABU DHABI/WAM
Chaired by His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the Board of Directors of the Central Bank of the UAE (CBUAE), the Board held its second meeting of the year today.
The Board noted that 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 meeting was attended by the Vice Chairmen of the Board, H.E. Abdulrahman Saleh Al Saleh and H.E. Jassem Mohamed Bu Ataba Al Zaabi, along with Khaled Mohamed Balama, Governor of the CBUAE. Also in attendance were Board Members Younis Haji Al Khoori, Sami Dhaen Al Qamzi, and Dr. Ali Mohamed Al Rumaithi, in addition to Their Excellencies Assistant Governors: Ahmed Saeed Al Qamzi and Ibrahim Al Sayed Mohamed Al Hashemi.
Building on its proactive approach, the Board, under the direction of the Chairman, approved a comprehensive Financial Institution Resilience Package, designed to reinforce the stability and resilience of the UAE banking sector in light of exceptional global and regional circumstances. The CBUAE, which oversees record-high foreign exchange reserves of more than AED 1 trillion (USD 270 billion) and a monetary base cover ratio of 119%, reaffirmed the strong fundamentals of the UAE’s AED 5.4 trillion banking sector.
The overall stock of liquidity held by UAE banks at the CBUAE, combined with their net eligible assets for conventional CBUAE operations, reached close to AED 920 billion (USD 250 billion), of which banks’ reserve balances exceed AED 400 billion (USD 109 billion).
The Financial Institution Resilience Package covers five key pillars allowing banks to access monetary liquidity and provides additional flexibility to utilise excess liquidity and capital buffers to support the UAE economy:
Pillar I: 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.
Pillar II: Liquidity and Funding Relief – Temporary relief in liquidity and stable funding ratios to provide banks with greater flexibility to support the UAE economy.
Pillar III: Capital Buffer Relief – Temporary release of the Countercyclical Capital Buffer (CCyB) and Capital Conservation Buffer (CCB) to support the UAE economy.
Pillar IV: Credit Risk Management – Providing flexibility to banks to postpone classification of individual and corporate loans for customers affected by the extraordinary circumstances.
Pillar V: 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.
The Board reiterates its readiness to deploy necessary policy tools to safeguard the stability of the financial system. It remains committed to maintaining and further enhancing the contribution of the UAE’s financial sector to the national vision and its financial sector competitiveness.
H.H. Sheikh Mansour bin Zayed emphasised the role of the UAE’s vision in shaping the nation’s strength, including its economic and financial landscape. He affirmed: “The UAE’s enduring financial and economic strength is rooted in the forward-looking vision of the UAE’s leadership. The CBUAE’s precautionary policies and proactive frameworks have consistently demonstrated their effectiveness in promoting the resilience and preparedness of the financial and banking sector, while ensuring monetary and financial stability. These achievements are a testament to the sustained confidence in our system and the global competitiveness of the UAE’s national economy”.