The central bank is the “bank of banks” in the UAE. It was established in 1973 and was known as the United Arab Emirates Currency board. It supervises other banks as well as the monetary of the country. In 1980, it was renamed to Central bank of UAE along with the introduction of the Emirates currency Dirham.
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The head office of this bank is located in Abu Dhabi with 5 associate branches in Dubai, Sharjah, Fujairah, Al Ain, and Ras Al Khaimah regions.
The work of the central bank is divided into seven departments
- Banking Supervision and Examination – It looks after each and every bank in the UAE right from providing banking license to the monetary consent.
- Banking Operations – This involves the printing of currency and managing cheques and electronic payments systems in the UAE.
- Research and Statistics – They generate the annual report along with the statistical and economic bulletins.
- Administrative Affairs – They look after the administration of the bank like building maintenance, library, security guards, etc.
- Financial Control – They have 3 sub-departments 1. Accounts 2. Treasury 3. Management information. Here they manage other banks information along with the treasure.
- Treasury – In this department, they manage the money flow and day-to-day operations of the central bank.
- Internal Audit – They overlook the funds transferred from the central bank, takes care of the security during electronic payments and reviews the expenses made at other government offices.
How the central bank of UAE manages monetary
Monetary management helps in the economical growth of the country. The Central bank of UAE provides funds to the government and assist them financially. The UAE currency dirham is printed by the central bank. It determines the quantity of currency required to be printed, which is definitely not an easy task as it has to take demand of currency into consideration to decide the quantity.
How the central bank decides EIBOR rates
This bank decides the interest rates on a mortgage loan in UAE. Even though the central bank doesn’t fix the EIBOR rate, it will have a panel with 10 reputed banks of UAE. Each bank provides a value on which the central bank picks an average value and sets as an interest rate on the home loan. Whereas the interest rates on other loans like personal loans, car loans, etc., are decided by the respective itself.
Related: EIBOR, LIBOR – What determines interest rates in UAE?
Foreign currency fluctuations
To make foreign currency transactions easy the central bank of UAE pegged AED to USD in 1998. Since then 1 AED = $3.67. This makes the inward and outward remittances easy for the people who are converting from AED to USD or vice versa. It also gives financial stability to a region that is rich in oil trading. Whereas, on other foreign currencies, dirham rate fluctuates on daily basis.
The central bank of the UAE helps in making UAE an economically strongest country. It ensures that UAE residents avail the best banking services. It runs a suggestion/complaint page, where the consumers can drop their complaints or feedbacks on the central bank or any other banks in the UAE.