| 28 Oct 2008 |
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UAE banks face no risk, says Central Bank governor
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Abu Dhabi: The UAE Central BankUAE Central Bank
Governor said on Monday the country's banks have used only 15 per cent of the Dh50 billion emergency funding facility which the UAE Central BankUAE Central Bank provided last month for banks to cope with the shortage of funds in the interbank market."For the time being, since the first facility has been utilised to the extent of 15 per cent, I think we can wait and see what will happen," Sultan Bin Nasser Al Suwaidi told reporters on the sidelines of a conference here.
Al Suwaidi was replying to a question whether there will be another emergency funding facility extended to the country's banks in the foreseeable future to ease the liquidity crunch. "Things are getting better, things are stabilising," Al Suwaidi added.
Minimum exposure
His comments come amid growing concerns of a severe impact of the global financial crisis on the Gulf economy that has prompted the UAE to guarantee bank deposits -- a move being replicated by others.
He said the UAE banks are at no risk in the current global financial crisis. "The UAE banks' exposure to the subprime and structured products, CDOs [collateralised debt obligations], credit default swaps and so on... is 1.2 per thousand," said Al Suwaidi.
"The situation in the US is totally different because you have loans and no borrowers. In the UAE, there are borrowers, there are real loans, there are real books, real mortgages and real documentation," he said.
He said a correction of real estate market in the UAE could happen, but the UAE banks will be able to weather the impact. "The UAE banks are well cushioned and we could go to a lower level," said Al Suwaidi, but he didn't elaborate.
Al Suwaidi said he supports the merger of banks in the UAE, a move that could help cut costs and increase efficiency.
Asked if the proposed GCC monetary union was possible by 2010, Al Suwaidi said: "Monetary Union is something and the [global financial] crisis is something else. Maybe the crisis will speed up the monetary union, not delay it."
On the UAE's gross domestic product (GDP) growth this year, Al Suwaidi said, "As you heard from the IMF [International Monetary Fund] reports, the UAE will have a lower growth of 6.6 per cent in 2008-09 on average." On the likelihood of another interest rate cut, Al Suwaidi said: "We follow the US Federal Reserve. If they do cut [interest rates], we might decide to cut. We might not decide to cut because the cut below this level is meaningless for monetary policy."
By Himendra Mohan Kumar
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Community Comments (4)
Joint GCC move needed: Cabinet
Arab News http://www.zawya.com/story.cfm/sidZAWYA20081028032632/Joint%20GCC%20move%20needed%3A%20Saudi%20Cabinet
RIYADH: - 28 October 2008
SNIP
Saudi Arabia has supported the decisions taken by the Gulf Cooperation Council (GCC) countries to counter the negative effects of the current global economic crisis. The support was voiced at a meeting of the Council of Ministers chaired by Custodian of the Two Holy Mosques King Abdullah at Yamamah Palace in Riyadh yesterday. UNSNIP
Those loans do indeed violate the dollar peg
http://blogs.zawya.com/goldiswealth/081020021138/
Joint GCC move needed: Cabinet
Arab News http://www.zawya.com/story.cfm/sidZAWYA20081028032632/Joint%20GCC%20move%20needed%3A%20Saudi%20Cabinet
RIYADH: - 28 October 2008
SNIP
Saudi Arabia has supported the decisions taken by the Gulf Cooperation Council (GCC) countries to counter the negative effects of the current global economic crisis. The support was voiced at a meeting of the Council of Ministers chaired by Custodian of the Two Holy Mosques King Abdullah at Yamamah Palace in Riyadh yesterday. UNSNIP
Those loans do indeed violate the dollar peg
http://blogs.zawya.com/goldiswealth/081020021138/
Maybe, the Gulf Central Bank will not want to be like the International Monetary Fund (nor like the European Central Bank.)
IMF may need to "print money" as crisis spreads
By Ambrose Evans-Pritchard
The Daily Telegraph, Last Updated: 10:46PM GMT 27 Oct 2008
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3269669/IMF-may-need-to-print-money-as-crisis-spreads.html
SNIP
The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.
Asked if the proposed GCC monetary union was possible by 2010, Al Suwaidi said: "Monetary Union is something and the [global financial] crisis is something else. Maybe the crisis will speed up the monetary union, not delay it."
Perhaps GCC monetary union is not about having a single currency
but about having a common currency
which cannot be inflated at will by the lender of last resort?
http://blogs.zawya.com/goldiswealth/080916103310/For%20Oman%2C%20GMU%20is%20MTM%20of%20gold%20reserves%20by%20GMA%2FGMC
Arab News
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