Well capitalized, liquid banking system: CBUAE

Image used for illustrative purposes.

Inayat-ur-Rahman, Enterprise Editor

Through the annual report, the UAE Central Bank expressed pride in its vital role in advancing the country’s efforts to contain the financial and economic challenges caused by the COVID-19 pandemic by applying a people-based approach. policies in the banking and insurance sectors, which are under its supervision.

Khaled Mohamed Balama, Governor of the UAE Central Bank, said he was pleased to report that the banking system is well capitalized, liquid and has the capacity to support the UAE’s growth agenda.

“2021 contained a mix of challenges and opportunities. CBUAE has played a vital role in guiding the nation through the economic challenges of the COVID-19 pandemic. He has applied a rigorous policy-based approach to the banking and insurance sectors he regulates and oversees, responding to changing economic developments and providing leadership in difficult times. Governor, added CBUAE.

“Bottom-up stress tests to explore potential vulnerabilities in the banking sector have shown that the UAE financial system is resilient and able to withstand different scenarios while maintaining adequate levels of capital and liquidity. The CBUAE has also rebalanced its pandemic-related stimulus package, the Targeted Economic Support Program (TESS), replacing measures designed to ease pressures from retail, businesses and banks with more targeted initiatives to support recovery.

Continuing its continuous efforts to modernize its monetary operations, the CBUAE rolled out the Dirham Monetary Framework, including the issuance of banknotes and the launch of new monetary instruments for liquidity management and forecasting – the intraday liquidity facility and the Dirham Overnight Index Average (DONIA). We aim to increase the use of the dirham to settle transactions within the Gulf Cooperation Council (GCC) and with our other international trading partners to relieve pressure on domestic entities to obtain foreign currency liquidity for transactions cross-border.

“Other improvements to the regulatory framework in 2021 included changes to paid-in capital requirements for banks, consumer protection standards, regulation of digital payments and outsourcing of services.”

“Our new focused operating model and organizational structure will help our internal operations meet the future challenges and demands of the UAE financial system. The merger of the Insurance Authority with CBUAE was completed last year, with substantial improvements to the supervisory and regulatory role of the CBUAE. We have welcomed the 120 employees of the former Insurance Authority to the CBUAE team.”

“We have emphasized the importance of our human resources, increasing the percentage of UAE nationals and expanding job training opportunities. We have also launched a pioneering training initiative in risk-based supervision in cooperation with the Irish Institute of Banking, a leading international organization for training finance professionals.

On the increasingly important cybersecurity front, CBUAE conducted a cyber warfare exercise – the first of its kind in the UAE. This has tested the cyber resilience of the banking industry and its ability to deal with sophisticated cyber attacks that have unfortunately become a global threat.

“The CBUAE has launched many fintech initiatives, including the mBridge platform to improve the processing of cross-border remittances, the National Payment System Strategy (NPSS) to modernize the payment infrastructure, a financing platform SMEs and financial services cloud infrastructure, with the goal of making the UAE a center of excellence in financial cloud services in the MENA region. These measures are designed to place the UAE at the forefront of jurisdictions offering the most secure, advanced and innovative digital banking services in the world.

“The CBUAE takes its AML/CFT responsibilities seriously, developing our policies, systems and processes accordingly. We have created the required AML/CFT infrastructure, in coordination with the National Committee, to ensure that we provide safe and transparent financial services in the UAE. We will continue to work closely with the FATF and other international bodies in the fight against money laundering and the financing of terrorism.

Balama added that he would like to extend his sincere thanks to the Board of Directors, CBUAE employees and all our associates for their tireless efforts in making these projects happen. Together, we have prepared the organization to achieve its goals of monetary and financial stability in the United Arab Emirates and to become one of the world’s leading central banks.

“Our mission at CBUAE in 2022 is clear and focused. We aim to improve monetary management and financial stability, and protect consumers through effective supervision of licensed financial institutions, prudent management of reserves, sound financial infrastructure, and adoption of digital technologies.

“We enter 2022 with enthusiasm and a strong desire to become one of the world’s leading central banks. We face the future with confidence, well equipped to deliver on our vision and mission for the nation over the next 50 years. Balama concluded.

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