The banking sector needs a further injection of liquidity to combat a decline in deposits and help revive lending as banks emerge from a quarter in which their earnings fell by more than 25 per cent, bankers and economists say.
With banks facing a shortage of deposits and rising delinquencies, lending has been sluggish, exacerbating the economic slowdown in the country.
The UAE has already taken steps to boost liquidity by guaranteeing banking deposits and arranging to pump Dh120 billion ($32.69bn) into the financial system. But analysts say the Central Bank may need to adopt more unconventional measures of the kinds being used in the US and Europe, including so-called quantitative easing, or the creation of money.
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