UAE needs one financial regulator

15 February 2008
A single regulator will help maintain Dubai's international reputation as a financial centre and be welcomed by banks.

The UAE, and Dubai in particular, likes to think of itself as a place that sets trends that the rest of the region follows. But Qatar's decision to set up a single regulator for its financial services sector has shown that it too can set the pace.

The Qatar Financial Centre Regulatory Authority is considered world-class in its standards, and in the legal system it has established to settle disputes. When it is merged with the existing domestic regulators, the Central Bank and the Qatar Financial Markets Authority, later this year it will create a single regulator.

Now UAE Prime Minister and ruler of Dubai Sheikh Mohammed bin Rashid al-Maktoum is expected to endorse a similar move to set up the UAE's own single regulator. This will help maintain Dubai's international reputation as a financial centre, and will be welcomed by banks who find the current regulations patchy and opaque.

As in Qatar, a single regulator should also create more competition between domestic businesses and those licensed in the free zones or other special regulatory environments.

Other changes are likely to accompany this, including the appointment of a new central bank governor to replace Sultan bin Nasser al-Suwaidi, whose term officially ended in December. His departure will not be mourned by many in the UAE banking community, who regard his period in office as ineffectual.

The setting up of the Dubai International Financial Centre (DIFC), which happened outside the auspices of the central bank, has been perhaps the country's greatest financial achievement, but such free zones have served their purpose in attracting international firms to the emirates. The arrival of a single regulator provides an opportunity for the federation to finally address its inadequate financial regulation system.

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