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UAE Central Bank announces liquidity management rules for banks 

June 3, 2015

Gulf News

The Central Bank of the UAE has announced a set of new regulations on liquidity risk management for the banking sector as part of compliance requirements for the Basel III rules on capital and liquidity requirements for UAE banks, the UAE official news agency WAM reported on Tuesday.

According to circular No. 33/2015, issued on May 27, 2015, all banks must abide by the provisions of these regulations and the guidance manual.

The objective of these regulations is to ensure that liquidity risks are well managed at banks operating in the UAE and are in line with the Basel Committee for Banking Supervision (BCBS) recommendations.

In three articles, the new regulations define the qualitative and quantitative liquidity management frame work for the banks operating in the country.

In quantitative requirements banks are mandated to keep a minimum level of liquid assets to meet sort term liquidity stress. Banks should also structure their funding profile to limit the impact of long term market disruptions.

To achieve these two objectives, the Central Bank requires banks to comply with the prescribed the Eligible Liquid Assets Ratio (ELAR); or move to the Liquidity Coverage Ratio (LCR) as and when approved by the central bank.

Banks approved to move onto the LCR will also be required to comply with the Net Stable Funding Ratio (NSFR) when this ratio comes into effect by 1 January 2018.

Read more: Gulf News

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