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ABU DHABI / WAM
The central bank of the United Arab Emirates has injected around AED15.86 billion in cash to the financial system in June to boost liquidity and compensate banks for the considerable amount of funds withdrawn out of excess liquidity in the market in April and June, according to the apex bank’s figures.
The move fits within the CBUAE’s mandate to direct the country’s credit policy, and to regulate and oversee the monetary and banking policy, ensuring their alignment with the government’s general plan in a way that ultimately strengthens the domestic economy, assures financial stability, regulate cash flows and withdraw cash surplus in order to retain economic resilience.
According to the bank’s figures, the certificates of deposit dropped to AED194.33 bn by the end of May from AED198.77 bn in April.
It’s noteworthy that CBUAE last month introduced a new deposit facility named Overnight Deposit Facility (ODF), which enables conventional banks operating in the UAE to deposit their surplus liquidity at CBUAE on an overnight basis.
“The introduction of the ODF is the first step towards implementation of the new Dirham Monetary Framework announced earlier this year,” the country’s financial regulator said in a statement in July.
The new deposit facility is aimed to be the prime facility for managing surplus liquidity in the UAE banking sector prior to the launch of the Monetary Bills Programme and replaces issuance of one-week Certificate of Deposits.