The UAEs banking regulator is seeking to reform the way lenders in the country quote indicative money market rates, and make it more transparent and uniform.
The central bank was concerned that there is a great degree of variation on any given day between the quotes submitted by the banks, which are the basis for calculating the Emirates interbank offered rate (Eibor), Reuters reported banking sources as saying. The variatioin happens because banks are not following a standard procedure to decide on quotes.
A panel of 11 banks submits daily quotes from which Eibor is calculated. The rates, which range from overnight to one year, are used to price financial instruments in the UAE, but they are often different from rates at which banks actually lend.
The central bank has engaged consultants Deloitte to study how individual banks calculate Eibor and recommend how quotes could be made more uniform, although it is not yet clear what action will be taken, the sources said.
The central bank in a statement following a board meeting this week said it had instructed necessary action to be taken on Eibor, without elaborating further.