The UAE Central Bank cut the reserve requirements for bank demand deposits and increased its economic stimulus package to Dh256 billion ($70bn) to mitigate the impact of the coronavirus outbreak on the country. Reserve requirements for demand deposits for all banks were halved from 14 per cent to 7 per cent. The move is intended to inject about Dh61bn into the banking system, to support lenders and their liquidity management, the regulator said on Sunday. "The UAE Central Bank continues to take appropriate and necessary actions to support the UAE economy in light of the Covid-19 pandemic," governor Abdulhamid Saeed said. The regulator also extended the duration of the Targeted Economic Support Scheme for affected retail and corporate customers, allowing banks and finance companies to defer the principal amount of loans and interest until the end of this year. The programme was introduced last month to offer collateralised loans from UAE Central Bank funds at zero cost to all lenders in the Emirates and free up funds tied to banks' capital buffers. On Sunday, the regulator also granted an extension of the capital buffer relief to the end of 2021 and allowed an extension of the zero-cost funding facility until December 31, 2020. Lenders in the Tess programme can use a third of their current regulatory liquidity buffers. The overall release of regulatory liquidity buffers is estimated at Dh95bn, the regulator said. The aggregate value of all capital and liquidity measures adopted by the regulator since March 14 has increased to Dh256bn, and consists of Dh50bn in capital buffer relief, Dh50bn in zero-cost funding support, Dh95bn in liquidity buffer relief and a Dh61bn reduction of cash reserve requirements. "The additional measures announced today will effectively relieve the pressure on financial institutions, allowing them to continue to carry out their crucial role as the backbone of the economy while offering the required relief and continued access to funding for businesses and households,” Mr Saeed said. The planned enforcement of certain Basel III capital standards will also be postponed until March 31, 2021 for all banks to reduce the operational burden on the financial industry during this challenging period, the regulator said. A guidance for banks and finance companies on the application of the IFRS 9 financial reporting standard was also issued in collaboration with the regulatory authorities of financial free zones – the Financial Services Regulatory Authority of the Abu Dhabi Global Market and the Dubai Financial Services Authority of the Dubai International Financial Centre. The regulator's latest measures come as the Covid-19 pandemic continues to gather pace in the West. More than 1.2 million people have been infected globally and deaths have climbed to almost 65,000, according to the <a href="https://coronavirus.jhu.edu/map.html">Johns Hopkins University</a>, which is tracking the outbreak. Over 247,000 patients have recovered so far. The outbreak has hit the global economy, which according to some estimates could contract more than 1.5 per cent this year. The International Monetary Fund expects recovery to begin only next year. The pandemic has forced governments to shut borders, bringing travel and tourism to a halt. About 75m tourism sector jobs are at risk globally. While governments around the world are ploughing more stimulus funds into their economies, unemployment numbers are surging in the West as companies lay off staff to stay afloat. The number of new US unemployment insurance claims reached a record of 6.6m for the week ending March 28 – twice as high as the previous record set the week before. The steps by the UAE Central Bank are "forward-looking, targeted and diverse, demonstrating that we are leveraging the full potential of the tools we have at our disposal, within our mandate", Mr Saeed said. The regulator "expects banks and finance companies to make active use of the Tess facility, for the benefit of their customers and the UAE economy". The boost in the stimulus package comes after a similar move by the UAE government, which increased its fiscal stimulus programme to Dh126bn last month. The package is intended to "cut the cost of doing business, support small businesses and accelerate major infrastructure projects", Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said at the time.