The Central Bank of the UAE is introducing a new Overnight Deposit Facility that will allow conventional banks operating in the country to deposit their surplus liquidity at the central bank on an overnight basis.
The CBUAE said the introduction of the In a single day Deposit Facility (ODF) is step one in the direction of implementation of the brand new “Dirham Financial Framework” introduced earlier this year.
Commenting on the launch of the ODF, H.E. Abdulhamid Saeed, Governor of the Central Bank of the UAE, said: “The introduction of this new facility is a reflection of the CBUAE’s continuous efforts to achieve the objectives of its monetary policy and to foster money market developments in the UAE. This new facility will support banks operating in the UAE in proactively managing their day-to-day liquidity and help in aligning overnight money market rates with the Base Rate in normal market conditions.”
The CBUAE will also provide an ODF variant to cater for Sharia-compliant licensed financial institutions.Until this facility becomes operational, the CBUAE will continue to offer to these institutions the one-week commodity Murabaha-based Islamic Certificate of Deposits, which will be breakable on daily basis.
