uae banks facing no liquidity problems cen bank says
News Posted On: 07 January 2010
The UAE Central Bank (CenBank) has said that the United Arab Emirates banks are not only in need of no further support, but are facing "no liquidity problems" whatsoever.
CenBank chief Sultan Bin Nasser Al-Suwaidi also told the press that the Emirates dollar peg would be staying in effect.
“We are pegged to the dollar, so we will be pegged to the interest rate, too,” he said, which also indicates that the Emirates will keep interest rates at their present low for as long as the US does (a long time).
Al-Suwaidi also said that the UAE will not be supporting plans for a single currency among Persian states.
Economists will be unsurprised by all but the liquidity of UAE banks. One can only assume that the banks in Abu Dhabi are being pooled with their counterparts in Dubai.
Obviously details of this are uknown, but what is known is that Dubai suffered some of the highest rates of bad loans anywhere in the world. Not least because literally thousands of foreigners pulled midnight flits rather than face the stiff punishments levelled against those who fail to pay back debts.
This is undoubtedly great news for the UAE Pr machine, but if it is true it could also be beneficial in the region's recovery. During the good times UAE banks financed projects throughout the region and if their liquidity is high then this should be the same in 2010. It could also aide in Dubai's recovery if foreigners are able to secure finance in the country, although it will undoubtedly be a lot more difficult than it was.
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