UAE guarantees deposits for three years to insulate economyOctober 13th, 2008 - 1:53 pm ICT by IANS
Dubai, Oct 13 (IANS) In a measure to insulate its economy against the global market crisis, the United Arab Emirates (UAE) has said it will guarantee deposits in all national banks and interbank lending operations within the country for a period of three years. The guarantee of deposits in the national banks would also include foreign banks which have significant operations in the UAE, the official WAM news agency quoted a ministry of finance release as stating.
During an emergency cabinet meeting Sunday, the government decided on a string of measures, including injecting liquidity to secure the economy from the global market carnage.
As a precautionary measure, last month the central bank pumped Dh50 billion ($13.6 billion) into the interbank market.
“The UAE economy and banking system are strong and sound,” President Sheikh Khalifa Bin Zayed Al Nahyan said Sunday after a briefing on the latest developments on the global financial crisis by Vice President and Prime Minister of Dubai Sheikh Mohammad Bin Rashid Al Maktoum.
“We are determined to protect our financial and banking system to preserve the interests of our country and people,” Shaikh Mohammad said.
Sunday’s statements by UAE leaders constitute the first assurance at the highest level yet in the Gulf region.
Market, nevertheless, reacted negatively Sunday to the global crisis.
Abu Dhabi’s main index was down 3.1 percent and the Dubai index was down 4.87 percent Sunday.
Business leaders and financial analysts said Sunday the government support was a very positive development for the economy and financial markets.
“This is great news for the UAE economy and the banking sector,” Ahmad Humaid Al Tayer, chief of Emirates National Bank of Dubai, said.
The financial services sector said the government’s unequivocal stand will restore the public’s confidence in the country’s financial system and the impact is expected soon to reflect on the market sentiment in the coming days and weeks.
“The time of fear is over and common sense should prevail. A decision of this magnitude is a reflection of the government’s trust in the banking industry in the UAE,” Abdul Aziz Al Ghurair, chief executive officer of Mashreq, said.
Tags: al tayer, global financial crisis, interbank market, khalifa bin zayed, market sentiment, mohammad bin rashid, national bank of dubai, president sheikh khalifa, united arab emirates, zayed al nahyan