Central Bank of the UAE Relaxes Key Ratios to Support Economy: COVID-19

Effective the 8th of August 2020, the Central Bank of the United Arab Emirates (CBUAE) announced the temporarily relaxation of the net stable funding ratio (NSFR) the advances-to-stable resources ratio (ASRR) for both local and foreign banks. The purpose of this move is to provide banks with enhanced flexibility, the ability to support the economy and manage their respective balance sheets better.

The NSFR measures the ratio between the amount of stable funding available and the amount of stable funding required, whilst the ASRR measures loans and advances as a share of stable sources of funding.

According to the CBUAE, the mandatory threshold will be relaxed by 10% for both ratios. For the NSFR, banks can go below the 100% threshold, but cannot go lower than 90%. For...