CBUAE | About the framework

Notifications

Monday 18 July 2022

Saturday 31 December 2022

Expo 2020

Join the making of a new world at the greatest showcase of human brilliance and achievement

Monday 11 July 2022

Saturday 31 December 2022

UAE Next 50

The year of preparation for the next fifty requires community collaboration to advance our development drive and its sustainability, and fulfill our aspirations to a better future for our UAE.

Accessibility settings

Text size

A-

A+

Theme color

Color blind mode

Night reading mode

Listen

Rate this page

Rated by 0 People

Name *

Please provide a valid value for Name

Email Address *

Please provide a valid value for Email Address

Phone number *

Please provide a valid value for Phone number

Subject *

Please provide a valid value for Subject

Message *

Please provide a valid value for Message

Back

About the framework

'The Dirham Monetary Framework (DMF) is a key initiative introduced by the Central Bank of the UAE in 2017 for the purpose of enhancing monetary policy implementation and developing money markets in the UAE.

The DMF describes our operations in the UAE Dirham money markets. It determines the monetary tools and operational methods to achieve our monetary policy objectives, including policies to manage the UAE Dirham exchange rate and money markets in the UAE.

The main pillars of this framework and related operational set-up are focussed on the overriding monetary policy objective of maintaining the UAE Dirham peg to the US Dollar.

The main benefits of the DMF are three-fold:

Introduce and consolidate liquidity facilities to ensure domestic money market rates align to US levels, in support of the foreign exchange peg.

Provide a clear distinction between Standing Facilities and Open Market Operations to improve the CBUAE’s capacity to manage liquidity.

Create incentives for Deposit-Taking Financial Institutions to manage their day-to-day liquidity stance proactively, and support money market development and collateralisation in the UAE.

Following extensive international benchmarking and consultation with the IMF and market participants on the DMF’s features and operational set-up, an independent market-wide risk assessment and consequences analysis was conducted on both the CBUAE’s balance sheet and market participants.

In January 2020, the Board of Directors instructed the Monetary Policy Department to implement the new DMF as per the timeline approved in the roadmap, and to establish the necessary steps to announce its implementation to participants in the domestic market.