According Zawya Dow Jones and Emirates Business 24/7, UAE’s Central Bank has set up a new task force to help the country’s financial industry deal with the global economic downturn.
The task force, known as the Financial Stability Unit, will deal with potential threats to the financial sector, according to a source.
“Real estate exposure is a potential problem as banks may not be able to weather the drop in value of real estate,†the source said.
The task force is the latest in a series of measures by the UAE government to restore confidence in the country’s economy and banks.
The Abu Dhabi-based Central Bank and Ministry of Finance have made available Dh120bn ($32.7bn) to provide liquidity for lenders as well as guaranteeing deposits.
“It’s to prevent the liquidity crisis from crystalising further, the intention is to nip problems in bud,†the source said.
The setting up of the unit is also part of a broad strategic review at the central bank, the source continued.
Liquidity remains tight in UAE markets despite measures by the government to boost confidence, and especially so in Dubai which has the most developed real estate market of all the emirates.
The Central Bank issued a statement yesterday saying that its board was studying proposals with the ministry of finance to introduce “financial vehicles†to back-up real estate loans.
