UAE may take action to boost bank lending

Economists say the UAE may take steps to increase bank credit, as a slowdown in lending and a surge in interest rates threaten to stall the country's recovery from the global crisis, Bloomberg has reported. 'The most effective way to lower the interbank rate would be to increase government deposits in the banking system to boost liquidity,' Monica Malik, Dubai-based economist at EFG- Hermes Holding told the news service. The UAE's 3-month interbank offered rate or EIBOR rose to a six-month high of 2.20875% last week, reflecting a shortage of deposits and banks' unwillingness to lend as they await the restructuring of $26bn of debt by state-owned Dubai World.