President issues Federal Decree restructuring Central Bank of UAE

President His Highness Sheikh Khalifa Bin Zayed Al Nahyan has issued a Federal Decree restructuring the Board of Directors of the Central Bank of the UAE (CBUAE), under the chairmanship of Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs.

Pursuant to the Decree, the Board of Directors of the CBUAE shall be reconstituted by the following members; Abdulrahman Saleh Al Saleh as the Vice Chairman; Abdulhamid Mohammed Saeed as the Governor; Younis Haji Al Khoori; Khalid Mohammed Salem Balama; Khalid Ahmad Humaid Al Tayer; and Dr Ali Mohammed Bakheet Al Rumaithi.

Established under the Federal Law No. 10 of 1980 as a public institution, the CBUAE promotes financial and monetary stability, efficiency and resilience in the financial system, and the protection of consumers through effective supervision that supports economic growth for the benefit of the UAE and its people.

The CBUAE’s official mandate includes the following: preparing and implementing monetary policy in line with the National Agenda; exercising the privilege of currency issuance; organising Licensed Financial Activities, establishing the foundations for carrying them out, and determining the standards required for developing and promoting prudential practices; setting up appropriate regulations and standards for protection of customers of Licensed Financial Institutions; monitoring the credit condition in the state, in order to contribute to the achievement of balanced growth in the national economy; managing foreign reserves to maintain, at all times, sufficient foreign currency assets to cover the monetary base; and regulating, developing, overseeing and maintaining soundness of the Financial Infrastructure Systems in the State, including electronic payment systems, digital currency, and stored value facilities.

 Immediate Payment Instruction: Financial transfers conducted through the Immediate Payment Instruction (IPI), reached Dhs4.7 billion since the system was introduced by the Central Bank of the UAE, CBUAE, in June 2019.

CBUAE statistics revealed that 1.9 million easiest and fastest transfer transactions were made from June 2019 to June 2020.

The CBUAE has introduced the IPI to enable customers make an immediate payment or transfer to another bank account in the UAE in real time, 24/7, 365 days a year and without any cut-offs.

With IPI, customers can initiate domestic fund transfers within UAE in in one minute for any amount within the limit of Dhs10,000.

The UAE banking system concluded the year 2019 in a resilient position with adequate capital and liquidity buffers well above regulatory requirements. The banking system remained profitable due to the effectiveness and improved cost efficiency benefitting from efficiency gains related to recent mergers in the sector, according to the UAE Central Bank report. The Central Bank of the UAE (CBUAE), has recently published its Financial Stability Report (FSR), which provides information, analysis and an assessment of the resilience and matters that require additional support in the banking and financial system in the UAE promoting public understanding and transparency. The report covers macro-financial conditions, regulatory developments, assessments of the banking and finance sector, as well as assessments of payment systems, capital markets and the insurance sector.

During the first quarter of 2020, the outbreak of the COVID-19 pandemic changed the outlook for global and domestic economic activity, posing challenges to the operating environment of the banking sector.

“However, our stress tests demonstrate that the UAE banking sector is able to withstand macro-financial shocks of any size,” the bank said in a statement. T

he government of the UAE and CBUAE have taken a wide range of measures to mitigate the adverse impact of COVID-19 pandemic and launched substantial financial programmes to help affected individuals and corporates and the economy at large. In addition, the temporary measures introduced by the CBUAE included the IFRS 9 (International Financial Reporting Standard), guidance and prudential filters that were designed to ensure financial and prudential reporting of financial institutions adequately, reflect the COVID-19 operating environment.

“Based on the most recent data, the aggregate lending and deposit growth remain stable and the banking sector in the country holds good level of liquidity and capital. The Capital Adequacy Ratio was 16.9 per cent as of end March 2020 and the Eligible Liquid Asset Ratio was 16.6 per cent as of end May 2020, well in excess of the minimum regulatory requirements,” according to CBUAE.

The Central Bank of the UAE announced recently that it will introduce a new deposit facility named Overnight Deposit Facility (ODF), which will enable conventional banks operating in the UAE to deposit their surplus liquidity at CBUAE on an overnight basis. The facility will effective from 12th July, 2020.  “The introduction of the ODF is the first step towards implementation of the new Dirham Monetary Framework announced earlier this year,” the UAE Central Bank said in a statement. It added, “The new deposit facility shall be the prime facility for managing surplus liquidity in the UAE banking sector prior to the launch of the Monetary Bills Programme and shall replace issuance of one-week Certificate of Deposits.

WAM