The interest rate on the liquidity support facility has been cut from 5 per cent to 3 per cent in an attempt to stimulate interbank lending.

The UAE also cut its deposit rate to 1.5 per cent, matching a move by the US Federal Reserve on 8 October when it cut interest rates to 1.5 per cent in a bid to stimulate the faltering US economy.

The UAE central bank has also attempted to reassure the local market by saying that UAE banks had an average capital adequacy ratio of 13 per cent, compared to the requirements of the international banking regulations of 8 per cent.