Dr. Omar Bin Sulaiman, Governor of the Dubai International Financial Centre (DIFC), has welcomed measures approved by the cabinet of Sheikh Mohammed bin Rashid AI Maktoum, ruler of the United Arab Emirates, to strengthen the UAE's banking system in the face of the global credit crisis.
On Sunday, the government of the UAE announced that it was taking a number of steps to restore confidence in the national banking system, most notably by guaranteeing savers' deposits and by underwriting interbank loans in an attempt to unfreeze the credit market. The UAE Central Bank has also created a AED50bn (USD13.6bn) fund to boost liquidity in the local banking system.
According to Bin Sulaiman, these actions reflect "the commitment of the country's leadership to protect the national economy."
"The measures announced following the cabinet meeting chaired by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, will be viewed by history as a series of significant decisions aimed at ensuring the continued stability, sustainability and growth of the UAE economy," he proclaimed.
"These brave measures indicate the UAE leadership's deep confidence in the strong fundamentals of the country's banking and financial system and the whole economy," he added.
In a separate move designed to reassure depositors and the wider economy, the UAE central bank announced on Saturday that the domestic banking system enjoys "a strong financial position" because the bulk of its deposit base rests on nationals rather than foreigners. The central bank stated that nationals own 75% of deposits in domestic and foreign banks incorporated in the UAE, with other Arabs owning 8% and other nationalities owning 17%.
The central bank also stated that the UAE's banks are well capitalised, with reserves representing just over 11% of bank assets. It added that this level is considered high under the Basel II global banking standards.
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