The Central Bank of the Emirates announced the introduction of new general terms and conditions for the available credit facilities and liquidity insurance facilities, under which licensed financial institutions in the UAE can obtain reserve funds from the Central Bank on a one-night basis or for other maturity periods by depositing qualified guarantees.
The new General Terms and Conditions, which will enter into force on 1 March 2022, set out the discretionary powers relating to the operation of this facility as well as the relevant guidelines for the administration of collateral.
Eligible counterparties may, at their own discretion, obtain any of the available credit facilities and withdraw from the Reserve Funds of the Central Bank on an overnight basis through guaranteed financing or Murabaha transactions, in order to meet any temporary liquidity needs.
In addition, the Central Bank may activate the Emergency Liquidity Insurance Facility in response to any actual or expected pressures of an exceptional nature, when eligible counterparties need the Reserve Funds from the Central Bank for extended periods.
In this regard, Khalid Mohammed Balama, Governor of the Central Bank stated: “The restructuring of the scope of eligible collateral will ensure a more effective intervention by the Central Bank to provide qualified counterparties with the liquidity they need in times of stress, or to deal with any challenges in the local market. In addition, the new features of the available credit facilities and liquidity insurance facilities will help the Central Bank to deal with all market conditions.”