The excess liquidity that the Emirates Central Bank withdrew from the market increased to 14.3 billion dirhams in four months, which raised the total cumulative balance of the certificates of deposit with the bank to 164.1 billion dirhams at the end of February 2020.
The liquidity that was withdrawn during the period from November 2019 to February 2020 constitutes about 65% of the total surplus cash withdrawn throughout the year 2019, which amounted to 22 billion dirhams, according to statistics issued by the Central Bank.
The Central Bank’s continued withdrawal of liquidity during the past months reflects its keenness to use it only in a way that serves the goals of the financial and economic policy of the UAE, in addition to the fact that the availability of excess liquidity with banks is an indication of the strength of their financial solvency.
According to global monetary concepts, financial solvency reflects the superiority of the institution's assets over its obligations, and is also an indication of its ability to fulfill its obligations and continue its operations in the future.
The certificates of deposit are one of the tools used by the Central Bank to achieve the objectives of monetary policy and liquidity management in the market, in addition to other tools that contribute in its entirety to controlling the movement of liquidity in the UAE.
It is noteworthy that the beginning of the year 2020 witnessed the largest activity in the amount of excess liquidity that was withdrawn as the balance of certificates of deposit increased from 156.3 billion dirhams in January to 164.1 billion dirhams at the end of February of the same year, according to statistics provided by the Central Bank.