The Central Bank′s objective is to "direct monetary, credit and banking policy and supervise over its implementation in accordance with the State′s general policy and in such ways as to help support the national economy and stability of the currency."
For the attainment of these objectives, the Central Bank is empowered to:
- Exercise the privilege of currency issue;
- Endeavor to support the currency, maintain its stability internally and externally and ensure its free convertibility into foreign currencies;
- Direct credit policy in such ways as to help achieve balanced growth of the national economy;
- Organize and promote banking and supervise over the effectiveness of the banking system;
- Undertake the function of the bank of the government within the limits prescribed in the law;
- Advise the government on financial and monetary issues;
- Maintain the government′s reserves of gold and foreign currencies.
- Act as the bank for banks operating in the country.
As such, the bank may carry out the following operations only with banks operating in the UAE:
1-issue, sell and buy the Bank′s deposit certificates
2- Sell, purchase, discount and rediscount commercial paper arising out of bonafide loans maturing within six months
3- Offer loans or advances on current account for 7 days without collateral, or up to six months against such collateral
Act as the State′s financial agent at the International Monetary Fund, the International Bank for Reconstruction and Development, and other International and Arab Funds and Institutions and carry out dealings of the State with such concerns.
The Central Bank also acts as the Bank of the Public Sector and accordingly advises the public sector on matters falling within the Bank’s jurisdiction. It also advises the public sector on monetary and financial affairs presented by the latter for consultation with the Bank.
As the institute of currency emission by the power of the Union law, the Central Bank′s right to issue currency is exclusive under the pain of legal prosecution.
With respect to Monetary Powers, the Central bank is entitled to:
1) Buy, sell and deal in gold bullion and gold coins;
2) Carry out any foreign exchange and external transfer operations,
provided that such transactions are only with governments, public institutions, local and foreign banks, central banks, and Arab and International Financial Institutions and Monetary Funds;
3) Maintain accounts with foreign central banks, foreign banks, Arab and International Financial Institutions and Monetary Funds;
4) Open accounts for central banks, foreign banks, Arab and
International Financial and Monetary Institutions and Monetary Funds, and act as agent or correspondent for such banks, institutions and funds;
5) Grant advances or credits to central banks, foreign banks, Arab and International Financial and Monetary Institutions, and obtain from them credit,-advances arid loans, provided that such operations conform with the Bank’s functions as a Central Bank;
6) Purchase, sell, discount and rediscount, through banks or
financial institutions, the bonds, notes and other instruments.
Other operations carried out by the Central Bank include investment of the funds derived from its own capital and reserves as follows:
1) to acquire real estate and movable properties necessary for the conduct of the Bank’s business, and for housing or
amenities for its staff;
2) to purchase and sell notes and loans issued or guaranteed by the Government or public institutions;
3) to purchase and sell shares in any entity in which the Movement participates, or which is granted a concession in the State of the United Arab Emirates.
Before the establishment of the Central Bank, the Currency Council used to be delegated the responsibility of Banking, Currency and Credit Policy with powers less than those granted presently by the Union Law No 10 for the year 1980 to the Central Bank.
The Central Bank formally commenced its functions on 11 December 1980 in pursuance of the provision of Union Law No. (10) of 1980, which superseded Union Law (2) of 1973, establishing the former Currency Board in the United Arab Emirates.
In order to enhance and reorganize the works in departments of the Central Bank, in keeping with the overall development of the State, and developments in the banking system in the country and international banking practices, the Board of Directors of the Central Bank issued Resolution No. 56/3/93 dated 19/4/93, reorganizing the structure of the Central Bank. According to this new structure there are now five branches, seven departments, seven divisions, and Risk Bureau. Each department consists of an appropriate number of sections to facilitate discharge of its functions as defined in the said resolution.
Mode of Finance
The capital of the Bank is 300 (three hundred) million Dirhams fully paid up by the Government.
The capital of the Bank may be increased from time to time by a Union Decree issued on the proposal of the Board of Directors as displayed by the Minister and approved by the Council of Ministers. In this case, the Government pays up the decided increase.
However,no reduction of the Bank’s capital is effected except by a law.
The Board of Directors, at the end of each year, determines the Bank’s net profits for the year after deducting
operational costs and making such provision as is necessary for the depreciation of assets and reserves, for bad and doubtful debts. for contributions to the pension and termination of service indemnity fund, and in general for
other financial expenses normally provided for by banks from their net profits.
Net profits are posted to the General Reserve Account until the balance reaches four times the size of the
The ways in which the Central Bank employs its capital, reserves and other funds is determined hence by the Board of Directors.
The Bank is prohibited to engage in any commercial activity, have a direct interest in any commercial, industrial or agricultural activity, or any enterprise, or acquire any immovable property, unless allowed to do so under the provisions of the Law.
Also, the Bank can not renew maturing bills that have been discounted by it nor can it accept, for discount or as a collateral,any commercial paper signed by a member of the Board of Directors,
or by any of the Bank’s staff.
(last updated: 03-June-2009)
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