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Mon 8 Nov 2010 10:24 AM

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Better bank liquidity regulation needed - UAE cenbank

Treasury department official says a liquidity regulation committee has been established in UAE

Better bank liquidity regulation needed - UAE cenbank

A UAE central bank official said on Monday there was a need to improve liquidity regulation for banks in the region, which were hit hard by the global financial crisis and bursting of Dubai's property bubble.

"Here in the UAE, we feel there is a need to improve liquidity regulations and be in line with the proposed liquidity framework," said Seif Al Shamsi, executive director for treasury department at the UAE Central Bank.

"As a result a liquidity regulation committee has been established here."

The UAE is not

considering depegging its currency from the dollar despite its

recent weakness, Shamsi said .

"At this moment and this time we're not considering that

(de-pegging). The reasons that we have are that oil is priced

with the dollar, our trade partners are mosty dollar-related and

more than 50 percent of our trade partners are dollar related,"

he said.

"At the present time we don't see this (de-pegging)

especially as there is no inflation," he added.

Shamsi also said that there were no worries over dollar

weakness due to low inflation, and that he expected interbank

rates to edge lower.

The UAE's

central bank is ready to hold certificate of deposit auctions

for Islamic banks, Shamsi said.

"We have not issued a single one (CD) yet, but the system is

ready for Islamic banks to come to the central bank to purchase

Islamic CDs," he said.