The Central Bank stated that it is currently evaluating possible options to limit the transmission of the Corona virus through banknotes and coins in circulation in the country.
The Central Bank, in statements to “Emirates Today”, confirmed that the banking system in the UAE is stable and sound, and that it has sufficient capitalization, liquidity and reserves, enabling it to continue to play its vital role in the economy.
He said: “In the context of our role as a supervisory authority over the country’s banking sector, the UAE Central Bank is committed to take the necessary measures to ensure the necessary protection for consumers, to maintain the stability of the banking system, and to continuously monitor the credit situation in the country.”
In addition, the Central Bank announced yesterday the second cut of interest on certificates of deposit in less than months by 75 basis points, which is the largest reduction since the global financial crisis, in line with a similar cut by the US Federal Reserve, which fell interest To zero levels, and launched a program of quantitative easing of $ 700 billion, bringing the price of lending to short-term funds between zero and 0.25%, as of yesterday.
Certificates of deposit
The Central Bank stated, in a statement, that, in line with the US Federal Reserve’s decision to reduce the interest rate on federal funds, with the aim of containing the repercussions of the global epidemic “Covid-19”, the Central Bank decided from March 16, 2020 the following: On certificates of deposit issued by the Central Bank and for a maturity period – one week – at 75 basis points, in line with the target interest rate for federal funds the upper limit, as well as maintaining the repurchase rate (repo), which applies to borrowing short-term liquidity from the central bank with a guarantee Certificates of deposit with 50 basis points above a price Certificates of deposit for a period of maturity per week, in addition to reducing the lending rate and the marginal facilities Murabaha facilities covered by ensuring 50 basis points, to 50 basis points above the repurchase rate (repo) certificates of deposit.
The «Central» pointed out that lowering interest rates, in line with the low interest rates by the Federal Reserve, will support the terms of credit by reducing the cost of lending.
It is noteworthy that the certificates of deposit issued by the Central Bank of banks operating in the country represent the monetary policy tool through which the effects of changing interest rates are transferred to the country’s banking system.
The governors of the monetary institutions and central banks of the Gulf Cooperation Council countries held a video conference yesterday to discuss the economic effects of the Corona virus, at the invitation of the Governor of the UAE Central Bank, Mubarak Rashid Al-Mansouri.
The meeting reviewed the steps and measures taken by member states, through monetary institutions and central banks, to enhance confidence in the economy, improve the business environment, support the private sector, and enable it to play its role in promoting economic growth, and mitigate the financial and economic impacts of Corona expected on this sector, This is through SME financing support programs, deferred payment programs, lending financing programs, and programs to support financing guarantees.
• Al-Markazi: “The banking system in the UAE is stable and has sufficient capitalization and liquidity.”