The functions of the Central Bank of UAE
RESEARCH ASSIGNMENT
You are required to write a short essay report summarizing your research on the Structure of Central
Bank of UAE. The report should not exceed 3 pages. In the report, students must attempt to provide
brief but logical and to the point answers to the following questions:
1. Who are the members of the board of governors? Who is the chairman of the Board? And how are
they elected? And for how long?
2. What are the functions of the Central Bank of UAE?
3. What policy actions were or are taken by the central of UAE to rectify the recent economic crisis?
4. What precautions should be taken into consideration to limit the impacts of a future crisis?
The report must be original and easy to follow. Full marks will be given to reports that are original, easy
to follow, and without any grammar or spelling errors. References must be clearly listed at the end of
the paper.
Solution
The Members of the Board of Governors, the Chairman of the Board and how are they
Elected? And Duration the Take in Office
The central bank of United Arab Emirates is headed by its Chairman. Present chairman is
H. E. Khalil Mohammed Sharif Foulathi, the chairperson is followed by his vice H. E. Khalid
Juma Al Majid. Apart from the chairperson and the vice chairperson the board of governors of
the bank consists of the Governor, H. E. Mubarak Rashed Khamis Al Mansoori, executive
member and senior management who include; Younis Haji Al Khoori,Khalid Ahmed Altayer,
Khalid Mohammed Salem Balama, Hamad Mubarak Bu Amim (Central Bank of United Arab
Emirates, 2016). The board of governor of the central bank of the United Arab Emirates is
appointed by the union declaration after it has passed through and faced the approval of the UAE
Council of Ministers. The elected board of governors is required to serve a period of four years.
The functions of the Central Bank of UAE
The functions of the central bank of the United Arab Emirates are very specific and
direct, the function of the bank are clearly defined and only focuses on the policies formulated by
the board of governor in collaboration with the government, the functions include; firstly, the
central bank of the UAE is involved in the formulation and implementation of banking services,
formulation of credit and monetary policies; the policies formulated ensures the growth of the
national economy of the UAE in the right direction as indicated in the national goal. Secondly
the central bank of the UAE is mandated to support the currency of the country and also to
maintain the stability of the currency both internally and externally so as to ensure that can be
easily be converted into foreign currencies. In addition, the central bank plays a role in directing
the credit policy in a unique way that will direct the country to develop and achieve balanced
RESEARCH ASSIGNMENT 3
growth of the national economy of the country so as to also impact the global economy. Finally,
the central bank organize, promote banking and supervise the overall banking system in the
country, furthermore, it involve itself in advising the government on financial and monetary
issues and make recommendations that promotes the development of the country’s economy.All
this function of Central bank of the United Arab Emirates are carried out as per the Decree or
article No. 5 of the Union Law No. 10 of 1980, which defines in all essence that the functional
boundary of the Central bank of the UAE and its overall role.
Policy Actions that were or are taken by the Central Bank of UAE to Rectify the Recent
Economic Crisis
In the United Arab Emirates, economic crisis have been major characteristics and
elements of the financial scenery in the recent times this crisis happens without a warning. Thus
the central bank of the UAE should put in place policy action that is undertaken when the
country is faced with financial crisis. The policy actions that were undertaken to rectify the
recent economic crisis in the UAE include; firstly, the central bank focused on the exchange rates
of the currency, the bank is working towards maintaining a fixed exchange rate of Dirham,
against other currencies especially the United State dollar and to ensure the free convertibility of
the national currency into foreign currencies. The central bank uses this policy of fixing the
exchange rate because as compared to other countries like the United State, the UAE is a small
economy with high inflation compared to other countries, it is reasonable to implement fixed rate
policy. However, it is proven that as the UAE continually keep the exchange rate fixed makes it
vulnerable to unexpected economic variable change that is seen taking place takes place. Finally
the government should come up with dynamic law and policy, that controls the financial crisis
and also that are abiding to society at large. The central bank of the UAE has recently taken
RESEARCH ASSIGNMENT 4
cognizance of these developments and regulatory frameworks, these rules are being used to
tackle some inherent financial problems (Elsamadisy, Alkhater, Basher, 2014).
The precautions that should be taken into consideration to limit the impacts of a future
crisis
There are many precautions that the central bank of the UAE should undertake so as to
limit the impact of the future crisis; firstly the central bank of the UAE should avoid focusing
only in controlling and raising money locally but also globally. By regulating the huge amount of
the country’s currency in both the global and local market will enable it to strengthen and also
regulate inflation. Secondly, the country, should take precaution while borrowing; the central
bank should reduce international borrowing on behalf of the government because, borrowing
affects adversely the country’s economy. As seen during the financial crisis in the UAE
international borrowing has more disadvantage because keeping more foreign reserves affects
the strength of the Dirham. Finally, the reviewing process of the memorandum regarding
formation of the financial laws and authority, Reviewing is important so as to remove the
mistake, this process should involve the Sharia scholars, legal and banking experts (Hamza,
2013).
RESEARCH ASSIGNMENT 5
References
Central Bank of United Arab Emirates, (2016). Board of Directors and Senior Management<
http://www.centralbank.ae/en/index.php?option=com_content&view=article&id=71&Ite
mid=1 10>
Elsamadisy, E. M., Alkhater, K. R., & Basher, S. A. (2014). Pre-versus post-crisis central
banking in Qatar. Journal of Policy Modeling, 36(2), 330-352.
Hamza, H. (2013). Sharia governance in Islamic banks: effectiveness and supervision model.
International Journal of Islamic and Middle Eastern Finance and Management, 6(3),
226-237.
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