International Finance

UAE central bank to introduce a new overnight deposit facility

UAE central bank
The new facility will allow conventional banks operating deposit their surplus liquidity at the central bank on an overnight basis

The UAE central bank has announced that it will introduce a new overnight deposit facility starting from July 12 which will reflect the monetary policy of the regulator.

The new facility to be introduced by the Central Bank of UAE will allow conventional banks operating in the country to deposit their surplus liquidity at the central bank on an overnight basis.

In a statement, the central bank of UAE said, It will be “the prime facility for managing surplus liquidity in the UAE banking sector prior to the launch of the Monetary Bills Program and shall replace issuance of one-week Certificate of Deposits.”

The general stance of the central bank’s monetary policy will be signalled through the interest rate of the new facility, which will become its main policy rate and will be referred to as “Base Rate”.

Earlier this month, the Central Bank of the UAE and the Abu Dhabi Global Market, the capital’s international financial hub invited financial technology companies to compete in the annual FinTech Abu Dhabi Innovation Challenge.

Richard Teng, chief executive of FSRA told the media, “The FSRA is excited to co-launch the innovation challenge … through the ADGM Digital Lab to overcome the pain points faced by the financial services sector in the UAE and the wider region.”

“The problem statements reflect the imperatives brought about by the current pandemic, which has accelerated the need to strengthen financing mechanisms for SMEs and digital onboarding,” he added.

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