Earlier this year when Abu Dhabi capitalized five of its own banks, panic spread throughout the Dubai banking sector. Waiting with baited breath, bankers in the ailing emirate anticipated action by the federal or local government to rescue Dubai’s banking sector. Finally, at the end of February, the Dubai government issued a $20 billion long-term bond program, selling the first half of the bond to the UAE Central Bank (CBUAE). Central Bank Governor Sultan Nasser Bin Al Suwaidi said he hopes to bridge the banking sector’s reported $30 billion gap between bank deposits and loans and beef-up the advances- to-deposit ratio in collaboration with the Ministry of Finance. While many referred to this bond program as a ‘bailout,’ the government labeled the move a ‘stimulus plan’ for the banking sector and economy as a whole. More important, however, is the message the Dubai sovereign sent out via this latest initiative:
