“Due to the controversy at the legislative authorities in the US, around the public debt of the US Government, we have received some questions from local and foreign media entities,” said the Central Bank of the UAE in a statement.
It added that the Central Bank of the UAE currently possesses no U.S. treasury bonds or any other financial instruments issued by the U.S. government due to the very low return on holding these instruments.
“We believe that the debate on the U.S. public debt ceiling issue will end with a compromise solution before the deadline date”, the statement added.
It indicated that “We do not believe that it is necessary to imagine that the U.S. government may default on its debts given its enormous potential, and we had seen in the past under President Clinton, the U.S. economy’s ability to reduce its public debt.” The statement noted that no fear on the U.S. dollar, although it is exposed to price fluctuations as it happens with all the major currencies. Despite the fact that the Central Bank foreign reserves are mostly denominated in U.S. dollars, they are invested mostly in non-US assets. Eventually these investments are not obligations on the U.S. government.
It added that there is no direct link between the dollar-denominated assets and the U.S. Government debt. The peg of the Dirham to the U.S. dollar is steady and consistent.
