Blind: A good level of capital and liquidity in the UAE banking system

Abu Dhabi: “The Gulf”

Khalid Muhammad Balama, Governor of the Central Bank, said in the bank’s annual report for the year 2021 that the past year has been a jumble of challenges and opportunities, and that the Central Bank of the Emirates has played an important role in to strengthen the country’s efforts. to limit the economic consequences of the Covid-19 pandemic, by applying a rigorous methodology based on banking and insurance sector policies subject to its oversight in response to economic developments, and to its leadership role in difficult times .
He added: “I am pleased to confirm that the banking system in the UAE enjoys a good level of capital and liquidity, and the ability to support the country’s growth plan. The stress tests carried out to investigate potential weaknesses in banking sector institutions have shown that the country’s financial system is resilient and able to withstand various negative scenarios, while maintaining adequate levels of capital and liquidity. ”

rebalancing

Balama said: “At the same time, the Central Bank has worked to rebalance the targeted comprehensive economic support plan, replacing measures designed to replace the pressure exerted by the pandemic on the retail, corporate and banking sectors with targeted initiatives. and measures to support the recovery of the economy. The Central Bank continued its efforts to modernize the framework of monetary activities by introducing the monetary framework for the dirham, including the issuance of cash bills, the introduction of new monetary instruments to manage liquidity and set expectations for liquidity facilities during the day, and the average index of the dirham overnight, which is called (minimum) We aim to increase the use of the dirham in the completion of transactions within the Gulf Cooperation Council countries, and with international trading partners, to put pressure on local institutions and maa to facilitate companies, and to ensure foreign exchange liquidity for cross-border transactions. ”
Improvements to the supervisory framework introduced in 2021 include changes to banks’ paid-in capital requirements, consumer protection standards, regulation of digital payments, outsourcing of service provision, completion of the Central Bank’s integration of the Insurance Authority, and the consequent measures to improve its strengthen supervisory and supervisory role In the insurance sector, in addition to the joining of 120 employees.

localization increases

According to the governor, the new target operating model and the organizational structure of the Central Bank will support the performance of internal operations to meet future challenges and meet the requirements of the financial sector in the country.
With regard to human development, the Central Bank emphasized the importance of the role of human resource management in the development of the performance of financial and banking work, by increasing the Emiratization rate and expanding vocational training opportunities. These events included the launch of a pilot training initiative in the field of risk-based supervision, in collaboration with the Irish Banking Institute.

Cyber ​​security and technology

In the area of ​​cyber security, which is increasingly important, the Central Bank has conducted practical training, the first of its kind in the UAE, to simulate cyber attacks, with the aim of testing the cyber resilience of the banking sector. and its ability to handle these advanced electronic attacks, which have become a tangible danger in the threat landscape around the world.
In the field of financial technology, the Central Bank has launched several key initiatives, including the “Bridge” platform project for multiple digital currencies for central banks, aimed at improving cross-border money transfer transactions, and the “National Strategy for Payment Systems”. “, with a view to modernizing the payment infrastructure, as well as the financing platform for small and medium-sized enterprises, and the cloud infrastructure for financial services, making the UAE a leading center for financial cloud services in the Middle East and North Africa, and gives it the world leader in providing the most secure, advanced and innovative digital banking services.

money laundering

The governor said: “As regards measures to combat money laundering and the financing of terrorism, the Central Bank develops its policies, regulations and procedures in accordance with best practices and international standards. It has developed an infrastructure to combat money laundering and the fight against terrorist financing in coordination with the National Committee for the Fight against Money Laundering and the Fight against Terrorism Financing and the Financing of Illegal Organizations, to provide safe and secure highly transparent financial services in the country. The Central Bank will continue to work closely with the Financial Action Task Force and other international bodies to confront financial crimes in its various forms. ”
He added: “Together we have prepared this institution to become one of the best central banks in the world. The message of the Central Bank, for the year 2022, is to work towards achieving the objectives associated with improving monetary management, financial stability and consumer protection, through effective oversight of licensed financial institutions, rational management of reserves, and the establishment of a strong financial infrastructure with the adoption of digital technology, which enables us From meeting our aspirations for the future with high confidence and readiness, to achieving the vision and mission of the UAE for the next fifty years. ”

Report findings

The results of the report support the estimates of the Central Bank, indicating that the economic recovery in the UAE is gaining steady momentum, due to the early and strong response to the various challenges and their repercussions, supportive macroeconomic policies, appropriate decisions , and the successful leadership of the Board of Directors of the Central Bank led by His Highness Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister, Minister of Presidential Affairs, Chairman of the Board of Directors of the Central Bank.
The report reviews the bank’s most prominent achievements in 2021, represented by several key axes, including the follow-up to the implementation of the targeted comprehensive economic support plan, the strengthening of efforts to combat money laundering and counter-terrorism, and measures taken to to improve the flexibility of the financial system in the country, and the measures taken to ensure the supervisory and control performance of the banking sectors. And insurance, new money market management tools in the country, initiatives in the field of green and sustainable finance, implemented and planned projects in the field of digital transformation, the improvement of payment systems and the strengthening of the financial technology sector, in addition to initiatives on the development of preparedness in the face of cyber threats and other operational risks.

Support steps

The annual report highlights the support steps taken by the Central Bank to help companies and individuals in the country, affected by the decline in demand and increased costs, within the framework of the comprehensive targeted economic support plan rebalanced in 2021, to solve the most focused steps to bring about recovery in all areas It replaces measures designed to ease pressure on retail, corporate and banking sectors.
In the context of strengthening its role as a regulator of the financial sector in the country, the Central Bank has proposed a set of internal procedures and processes to improve the monetary and financial stability of the country, ensuring access to liquidity , in addition to providing a rational, risk-based supervisory framework in the financial sector. It also conducted stress tests to improve the capabilities of state-owned banks to overcome potential challenges in the future.
In the field of combating money laundering and the fight against terrorist financing, the report focuses on the tireless efforts of the Central Bank at various levels, in particular its contribution to national initiatives, the development of improved supervisory instruments for the degree and level of risks. monitor, issue regulations and guidelines in various sectors, in addition to training and cooperation At local and international level, including the International Financial Action Task Force (FATF).
The Central Bank also achieved significant achievements represented in the third edition of the national currency by launching the new 50-dirham banknote made from recyclable polymer, which celebrated the image of the founding fathers on the occasion of the fiftieth anniversary of the founding of the United States. Arab Emirates.
In the field of digital transformation, the report focuses on the Central Bank’s various initiatives and projects, some of which are implemented, within the framework of strengthening the capabilities of the financial system and the associated digital infrastructure, facilitating innovation and increasing of cost-effectiveness at the state level, including projects related to improving payment systems at the local level. Expanding the base of confidence in the Emirati dirham as a cross-border currency, either through continued work on the national platform for immediate payment, or digital currency projects for central banks in collaboration with some central banks in the region and the world.
At the same time, the Central Bank has achieved tangible results and achievements in the development of risk preparedness in a range of potential issues, including information security, cyber threats, operational risks and the provision of confidential channels for whistleblowers.

Training and Employment

As part of its future strategy, the strategic plan for the years 2023-2026 defines the central bank’s message to be one of the best central banks in the world in promoting monetary and financial stability, and supporting the country’s goals that related to competitiveness. This plan is in line with the UAE Government’s comprehensive roadmap for the next fifty years, which includes the provision of the necessary support and training to improve the activity of employing Emirati citizens in the financial sector in the country, with the goal of creating 5,000 new jobs by the end of 2026, in addition to providing financial technology and transformation initiatives.
The Central Bank has confirmed that in 2022 it will continue to focus on ensuring financial stability and consumer protection through effective oversight of licensed financial institutions, strengthening the monetary framework and payment infrastructure, and investing in the adoption of new digital technologies. , which helps him in looking to the future with full confidence and looking to the future, and contributes to strengthening the faith in his abilities to fulfill his mission in realizing the future aspirations of the state.

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