Data issued by the Central Bank revealed that the value of the obligatory reserves and liquidity and cash held by the banking sector in the UAE amounted to 408.5 billion dirhams, at the end of last January.

According to the data of the central bank’s monetary survey report yesterday, these components, along with certificates of deposit, constitute the state’s cash base, and are considered the first protection valve against market risks and crises.

The Central Bank sets strict rules for banks, obligating them to allocate a mandatory reserve ratio of 14% of the value of demand deposits, and 1% of the value of future deposits, in order to provide liquidity and confront crises, which reached the end of January 130.8 billion dirhams.

The Central Bank allows banks to withdraw the obligatory reserve completely, in addition to 20% of it in case it needs liquidity. However, according to the Central Bank’s data, banks also maintain certificates of deposit that can be liquidated at any time, amounting to 156.3 billion dirhams at the end of January. the past.

According to the statistics, banks also have cash issued and surplus cash reserves in the amount of 121.4 billion dirhams.

Commenting, the banking expert, Mustafa Al-Rikabi, said that the UAE has a strong banking system that takes into account the best standards in place in creating reserves and ensuring cash surpluses to meet the requirements of growth and address any risks, whether in the global market or as a result of fluctuations in oil prices.

He explained that the requirements of the central bank in forming compulsory reserve ratios protected banks from risks over the past several years, as they are obliged to set aside specific percentages of deposits, in addition to the liquid surpluses that are used in settling daily transactions between checks and others.

For her part, the banking expert, Sheikha Al-Ali, said that the banking sector in the UAE is the largest Arab and Gulf thanks to its solid monetary base and large assets, noting that the system of decisions and regulations set by the central bank has created a banking environment capable of facing internal and external challenges. She added that the compulsory reserve ratios and the balance of the certificates of deposit, in addition to the cash issued in the country and which is dealt with, are almost all the components of the largest monetary base in the region.

Al-Ali stressed that this system helped banks to overcome the challenges of the global financial crisis in 2008, and is currently helping them to meet the expectations of deflation growth, whether due to the performance of the global economy or as a result of the implications of the potential spread of the Corona virus on the economy globally.