The balance of mandatory reserves of UAE banks at the Central Bank increased to 132.6 billion dirhams during the first quarter of 2020, an increase of 7.7% compared to the first quarter of 2019.
According to the statistics included in the central bank's monetary survey report, the mandatory reserve witnessed a continuous growth during the past months, which reflects the financial solvency of the banking system in the Emirates.
According to the regulations of the Central Bank, the compulsory reserve limit ratio relates to the reserves that banks must keep with the bank against customer deposits, without obtaining an interest rate for that.
The balance of the mandatory reserve of banks with the Central Bank was about 126.2 billion dirhams in September of 2019, then it rose to 129.7 billion dirhams in December of the same year.
With the beginning of the first month of the year (January) 2020, the reserve balance increased to 130.8 billion dirhams, but it returned to the level of 130.1 billion dirhams in February, before rising again to 132.6 billion dirhams in March.
It is noteworthy that the mandatory reserve of banks with the Central Bank is among the list of tools that the bank is entitled to use to achieve the objectives of its monetary policy, along with other tools such as the dollar/dirham swap mechanisms to provide dirhams to banks, advances and overdraft facilities for banks and precautionary measures as well as certificates of deposit and repurchase facilities deposit certificates issued by the Central Bank (“Repo”) and liquidity support facilities with banks.
Source (Al-Khaleej Newspaper-UAE, Edited)
