The Central Bank of the United Arab Emirates announced today, Monday, the launch of a new program for issuing securities called the cash bills program for licensed financial institutions and eligible investors, starting January 11, 2021.

In a statement, the UAE Central Bank indicated that these securities will be auctioned and traded in the primary and secondary markets through solutions developed by Bloomberg..

The Central Bank clarified that the settlement of these securities takes place through a local platform, compatible with international standards, that was established and operated by Euroclear Bank..

He pointed out that the new program of issuances aims to provide an integrated system for managing liquidity in the banking sector in the country.

The Central Bank will determine the dates on which the issuance will take place, the quantities that will be offered, in addition to setting specific controls for the maturity periods..

The creation of an innovative local platform in cooperation with Euroclear as well as the circulation of cash bills through Bloomberg auctions and automated bond trading systems, will facilitate the access of qualified investors to the cash bills market in a unified, safer and efficient way.

This service will allow market participants in the country to maintain a unified and sustainable pool of dirham liquidity.

The UAE Central Bank seeks, through the cash bills program, to promote the development of a secondary market for dirham-denominated securities, and then create a risk-free pricing index (yield curve) that would stimulate more local market activities..

The Central Bank expects that the introduction of liquidity pool in dirhams will increase the circulation of cash bills, and it is also likely to help reduce fluctuations in the cost of borrowing, in general, and stabilize returns in the local money and money markets.

Saif Hadef Al Shamsi, Deputy Governor of the Central Bank of the United Arab Emirates, said: “The introduction of the cash bills program provides an opportunity to create an effective infrastructure, necessary not only to manage liquidity, but also to provide a stable source of guaranteed liquidity for banks and financial institutions operating in the country.”

Al Shamsi added, “We are confident that the establishment of such infrastructure will also help in developing a local market for securities denominated in dirhams and issued by the public sector in the country in the future.”

Earlier, the Central Bank of the Emirates launched the Young Economists Program, which is working to qualify young cadres for the labor market and prepare them to assume vital positions in the financial and banking sector.