The decongested streets of Dubai seem strangely incongruent with the message that the federal government of the United Arab Emirates (UAE) would have you to believe — that the effects of the global financial crisis haven not been severe in the UAE. Egyptian investment bank EFG-Hermes estimates that the total population of the UAE — of which more than 80 percent is comprised of expatriates — will contract by 5.5 percent by the end of this year, propelled by Dubai which is forecasted to lose 17 percent of its inhabitants. While the well-endowed government saves its economy through multi-billion dollar bond issuances, setting up emergency funding facilities and pumping numerous liquidity injections into the banking sector, bankers can take a big sigh of relief, but not for long. Indeed, the deep-pocketed sovereign is propping up the country’s banking system — addressing major issues such as tightened liquidity conditions and toughening
