ABU DHABI, 11th August, 2022 (WAM) — The Central Bank of the United Arab Emirates (CBUAE) has released its Financial Stability Report for 2021 which outlines the measures taken by the CBUAE to support the national economy during COVID-19 pandemic and preserve the stability of the financial system.
Among these key milestones was CBUAE’s phased exit strategy from the Targeted Economic Support Program (TESS) as the UAE’s economic recovery begins, with the first phase completed by the end of 2021 and the second phase concluded from by the end of June 2022. The CBUAE will maintain the third final phase of the TESS measures during the second half of 2022.
The CBUAE also carried out risk-based supervision and solvency and liquidity stress tests to assess potential vulnerabilities. Overall, these tests indicated that the UAE banking system had sufficient capital and liquidity buffers to withstand severe shocks.
The report outlines risks to the banking system stemming from potential deterioration in asset quality and insufficient change in banks’ business models in light of global digital transformation, climate change and increasing governance demands .
The UAE government‘s response to the COVID-19 pandemic has contributed to the rebound in overall economic activity in the UAE. CBUAE measures have supported the resilience and recovery of the domestic banking system and the broader financial system to pre-pandemic levels.
In addition, the report covers CBUAE’s payment systems which proved to be robust in 2021. With the acceleration of digitalization of financial services, the central bank has further improved its systems, enhanced digital transformation and ensured cyber- resilience.
Khaled Mohamed Balama, Governor of the Central Bank of the United Arab Emirates, said: “The Financial Stability Report records the CBUAE’s approach to identifying and mitigating potential systemic risks and safeguarding the stability and resilience of the financial sector of the United Arab Emirates. United Arab Emirates The report projects a positive outlook for the country’s economy and financial system in 2022.
“The global macro-financial outlook could, however, be adversely affected by supply chain disruptions, growing inflationary pressures and further escalation in geopolitical tensions. We will continue to monitor developments in global vulnerabilities closely and stand ready to take additional measures if necessary.
“CBUAE’s vision is to become one of the world’s leading central banks by improving monetary and financial stability and supporting the competitiveness of the UAE. We share this determination with the UAE leadership and licensed financial institutions, and together , we are implementing an ambitious transformation strategy to achieve this.”
