The Central Bank of the UAE (CBUAE) has approved a comprehensive Financial Institution Resilience Package designed to reinforce the stability of the nation’s banking sector as the UAE’s economy deals with extraordinary market conditions amid missile and drone attacks from Iran.

The package consists of five pillars designed to provide banks with greater flexibility to support the national economy. These include enhanced access to reserve balances up to 30% of the cash reserve requirement and the availability of term liquidity facilities in both dirhams and US dollars.

The package further provides temporary relief in liquidity and stable funding ratios, alongside the temporary release of the Countercyclical Capital Buffer and Capital Conservation Buffer. To assist customers, the CBUAE is providing flexibility for banks to postpone the classification of individual and corporate loans.

The central bank also said that banks should continue to provide required financing services to support their customers and the wider national economy.

The announcement followed the board’s second meeting of the year on 17 March. During the session, the board noted that the UAE’s financial system has demonstrated significant resilience, with no material impact currently felt by the banking sector’s health or payment systems despite the prevailing international economic climate.

The CBUAE said that it oversees record-high foreign exchange reserves exceeding AED1tn ($272bn), with a monetary base cover ratio of 119%. The total stock of liquidity held by UAE banks at the CBUAE, combined with net eligible assets for conventional operations, has reached about AED920bn, of which reserve balances exceed AED400bn.