Banks in the United Arab Emirates will be required to comply with four so-called “liquidity ratios” to help them withstand market disruptions and avoid a cluster of debt payments, according to new central bank rules.
Lenders will be required to hold 10 percent of their liabilities in “high-quality liquid assets” from Jan. 1 to meet a new liquid assets ratio, according to the liquidity regulations issued by the central bank July 12 and posted on its website today. The assets include cash, central bank certificates of deposits, U.A.E. federal government bonds, reserves and other account balances at the central bank, the regulator said. They could also include debt of local governments and public entities. The ratio will be replaced by a new liquidity coverage ratio from Jan. 1, 2015, it said.
“A minimum level of liquid assets should be held at banks (ADBF) to ensure its ability to sustain a short-term liquidity stress, both bank specific and market-wide,” the central bank said. It will set up a liquidity task force to ensure a smooth implementation of these rules by the required dates, it said.
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