Central Bank of UAE to press on with measures that support growth and digital banking

Amid the global pandemic, 'efficient policies and mechanisms', are required, says Sheikh Mansour bin Zayed

The Central Bank of the UAE praised the UAE leadership for its efforts in aiding the country's economic recovery. Ryan Carter / The National

The Central Bank of the UAE will continue to focus on financial and fiscal stability during the current crisis, supporting economic growth, countering inflation and boosting the country’s foreign currency reserves, its chairman said.

The “critical juncture” the world is at amid the global pandemic, requires further development of the financial infrastructure and digital solutions, which the UAE regulator is overseeing, Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, said according to Wam.

"Efficient policies and mechanisms will be developed to respond to rapid developments in the global banking and monetary sector," Sheikh Mansour said.

"The coming period will see significant support by the board for the central bank's senior management to embrace digital transformation and to ensure greater efficiency and a higher level of operability," he told a virtual CBUAE board meeting.

The competence and expertise of the UAE central bank will help propel it among the best banking regulators regionally and globally over the next five years, Sheikh Mansour added.

The UAE banking regulator is also looking to “accelerate digitalisation efforts by overhauling the current policies and corporate governance laws and regulations," Abdulhamid Saeed, Governor of the CBUAE said.

It is also focusing on the development of a digital Identity for financial institutions, enhancing cybersecurity and developing an open banking framework, he added.

The central bank board, which was restructured earlier this month, also discussed the development of the financial infrastructure in the country and digital solutions for small and medium-sized enterprises (SMEs).

The UAE banking regulator has taken a series of measures to strengthen the financial system and support the country’s economy amid the pandemic-driven slowdown. It is encouraging banks to lend to companies, especially SMEs, to help them steer through the current economic volatility.

The CBUAE was among the first regulators in the Middle East and North Africa to roll out Dh256 billion worth of stimulus measures. It started with a Dh100bn package on March 14 that included a direct Dh50bn injection of funds to boost liquidity by way of zero-cost collateralised loans.

Measures also included an easing of lenders’ capital and liquidity reserve requirements. Last month, the central bank said that lenders have already drawn down 88 per cent of its Dh50bn Targeted Economic Support Scheme.

Earlier this month, Mr Saeed said the UAE’s banking sector is well-capitalised and can withstanding macroeconomic shocks of any size. The UAE’s banks had an average capital adequacy ratio of 16.9 per cent at the end of March this year, and an eligible liquid asset ratio of 16.6 per cent.

“The banking system proved its ability to face the consequences of Covid-19 pandemic and perform its role in supporting the economy,” Mr Saeed said, at the time.