Banking and financial crisis the in UAE
The United Arab Emirates is one of the well-known and influential leading countries with a great development potential and a robust economy.
The Government of the United Arab Emirates directs all the efforts towards raising and maintaining leading positions of the country in the most important international rankings. As of today, the young Arabic country has already become a strong industrial, political and financial player in the international market.
All these achievements strengthen the overall social, political and financial standing of the country and make it resistant to the most unpredictable challenges and threats of the global economy.
The future-oriented and well-thought-out policy of the UAE Government has served a major guideline for the country during the 2007-2010 Global financial crisis. In fact, the country has managed to cope with all the difficulties of this global challenge in the comparatively short period and with the minimal negative consequences for the national financial system.
The global financial crisis had reached the United Arab Emirates at the beginning of 2009 and affected almost all the key sectors, such as construction, real estate, trade, tourist, etc. These sectors were the first to feel the damaging effects of the economic fluctuations.
The global financial crisis did not have any direct impacts on the UAE banking system. This has become possible primarily due to the availability of the significant financial reserves, which were obtained during the unprecedented 2008 rise in oil prices (up to $150 per barrel). Secondly, the foreign banking institutions had beforehand injected a considerable amount of money into the UAE economy in such a form as loans and investments. It was made with the purpose to avoid possible larger losses, which they would have in the case of the UAE debt default.
Another notable fact is that no bankruptcy happened in the Dubai banking sector during the financial crisis. This was a rather significant advance, especially if comparing with the bankruptcies in such well-developed countries as the United States of America and others.
It should be noted that the Central Bank of the United Arab Emirates has also contributed to the stability of the UAE banking system. So, for example, an extra liquidity facility was introduced in spite of the fact that there were no significant deposit outflows observed during the UAE financial crisis. Besides, such banks’ liabilities as deposits and interbank loans have been being backed by the three-year federal government guarantee since the September 2008.
The evidence that the Global financial crisis had almost no effect on the UAE financial system is also proved by the data gathered in the various financial reviews. In fact, the UAE national GDP has crossed the $270 billion mark in 2009.
It is also essential to take into consideration that the UAE banks did not suffer significant client outflow during the period of the UAE banking crisis. On the contrary, they have enjoyed a rather high level of trust from their clients and investors. This situation is exactly opposite to the prevalent tendencies in the banking systems of the other well-developed countries.
Conclusion
The United Arab Emirates is one of the very few countries that has managed to go easily through the Global financial crisis and maintain its high levels of social, political and economic development. The UAE banking system has proved its reliability and stability.
The United Arab Emirates financial crisis has consolidated all the efforts of the political authorities and financial experts on the way to develop the reliable and stable banking system.
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