'Liquidity in the banks but not in the market'

Pumping more liquidity into the economy is the only way to prevent a downturn, said Union National Bank CEO Mohammad Nasr Abdeen.

The banks have a good level of liquidity but there is a shortage in the market, he told Emirates Business at the group's general assembly. Asked about the Central Bank's plan to reduce interest among banks to one per cent or less, he said: "The problem is not one of reducing the rate of interest among banks. Rather what is needed is a reduction in the rate of interest on deposits and loans.

"In the current situation banks are competing to attract deposits at very high levels of interest and this pushes up the loan rate. This will in future have a negative effect on the national economy. I believe the best solution at the moment is pumping in more liquidity.