Central Bank of the UAE (CBUAE) Guide | Roles, Policies & Regulations

In an economy where the UAE dirham has remained pegged to the US dollar for decades, banking failures are rare, and financial digitisation is accelerating at state level, one institution quietly underpins trust across the entire system: the Central Bank of the United Arab Emirates (CBUAE). More than a currency issuer, the CBUAE is the architect of monetary stability, financial supervision, consumer protection, and systemic resilience in one of the world’s most internationally connected economies.

This guide explains what the Central Bank of the UAE is, how it works, who governs it, and why its role matters for residents, businesses, investors, and anyone interacting with the UAE financial system.

What Is the Central Bank of the UAE?

The Central Bank of the United Arab Emirates (CBUAE) is the UAE’s federal monetary authority, responsible for issuing the national currency, formulating monetary policy, regulating financial institutions, and safeguarding financial stability.

It operates as an independent public institution with legal authority granted under Union Law No. 10 of 1980, later modernised through subsequent federal decree-laws to reflect global banking, insurance, and financial technology standards.

Unlike commercial banks, the CBUAE does not serve retail customers. Its mandate is systemic: ensuring confidence in the UAE’s financial system at both domestic and international levels.

Historical Background and Legal Foundation

The origins of the CBUAE are closely tied to the formation of the UAE itself.

Following the federation in 1971, the UAE Currency Board was established in 1973 to issue the UAE dirham. As the economy expanded, this structure proved insufficient for supervising banks, managing reserves, and responding to global financial cycles.

On 11 December 1980, the Currency Board was transformed into the Central Bank of the United Arab Emirates, with expanded powers covering:

• Monetary and credit policy
• Banking supervision
• Reserve management
• Government banking functions

Since then, the legal framework has been periodically updated to include insurance regulation, payment systems, AML/CFT compliance, digital finance, and consumer protection.

Core Mandate and Strategic Objectives

At its core, the CBUAE exists to maintain monetary and financial stability while supporting sustainable economic growth.

Its objectives include:

• Preserving the stability of the UAE dirham
• Ensuring the soundness of banks and insurers
• Protecting consumers of financial services
• Strengthening financial infrastructure and resilience
• Aligning the UAE with international regulatory standards

These objectives are pursued through policy, supervision, enforcement, and market oversight rather than commercial activity.

Monetary Policy and the UAE Dirham Peg

One of the most defining features of the UAE’s financial system is the fixed exchange rate peg between the UAE dirham (AED) and the US dollar.

• Official peg: 1 USD = 3.6725 AED
• Maintained through active reserve management and interest rate alignment

The CBUAE’s Base Rate is anchored to the US Federal Reserve’s Interest on Reserve Balances (IORB), meaning monetary policy decisions in the UAE closely track US interest rate movements.

This framework provides:

• Exchange rate certainty for trade and investment
• Low inflation volatility
• Predictable monetary conditions for banks and businesses

Regulation and Supervision of Financial Institutions

The CBUAE licenses, regulates, and supervises Licensed Financial Institutions (LFIs) operating in the UAE.

These include:

• Local and foreign commercial banks
• Islamic banks and windows
• Finance companies
• Exchange houses
• Payment service providers
• Insurance companies and intermediaries

Supervision focuses on capital adequacy, liquidity, governance, risk management, and compliance with AML/CFT regulations aligned with FATF standards.

Institutions failing to meet regulatory requirements may face restrictions, fines, or licence revocation.

Role in the Insurance Sector

Since regulatory reforms in the late 2010s, the CBUAE has also assumed authority over the insurance sector, previously supervised by a separate insurance authority.

Its role includes:

• Licensing insurers and insurance intermediaries
• Setting solvency, capital, and governance standards
• Monitoring claims handling and market conduct
• Protecting policyholders and beneficiaries

This integration allows unified supervision across banking and insurance, reducing systemic risk.

Consumer Protection and the Sanadak Platform

For individual customers, one of the CBUAE’s most visible roles is consumer protection.

The Central Bank issues binding standards on:

• Transparency of fees
• Fair lending and collection practices
• Complaint handling timelines
• Data protection and confidentiality

Unresolved complaints against banks or insurers can be escalated through Sanadak, an independent dispute resolution platform overseen by the CBUAE.

This mechanism strengthens consumer confidence without direct court involvement.

Financial Infrastructure and Digital Transformation

The CBUAE plays a central role in building and regulating the UAE’s financial infrastructure.

Key areas include:

• National payment systems and settlement platforms
• Real-time gross settlement (RTGS)
• Digital wallets and stored-value facilities
• Open finance and data-sharing frameworks

In recent years, the bank has also accelerated work on Central Bank Digital Currency (CBDC) initiatives, supporting cross-border settlement efficiency and long-term monetary innovation.

Reserve Management and Government Banking

As the banker to the federal government, the CBUAE manages:

• Official foreign currency reserves
• Gold holdings
• Government accounts and transactions

It also acts as a lender of last resort to UAE banks, providing liquidity support during market stress to prevent systemic disruption.

Governance, Leadership, and Organisation

The CBUAE is governed by a Board of Directors chaired by a senior UAE leader.

• Chairman: H.H. Sheikh Mansour bin Zayed Al Nahyan
• Governor: H.E. Khaled Mohamed Balama

The head office is located in Abu Dhabi, with branches in Dubai, Sharjah, Al Ain, Fujairah, and Ras Al Khaimah to ensure nationwide supervision.

Internal departments cover banking supervision, operations, research and statistics, financial stability, and administrative affairs.

Data, Reports, and Economic Publications

The Central Bank is a primary source of authoritative economic data in the UAE.

Regular publications include:

• Annual Report
• Financial Stability Report
• Quarterly Economic Review
• Monetary and Banking Statistics
• Balance of Payments data

These reports are widely used by policymakers, investors, researchers, and international institutions.

Why the Central Bank of the UAE Matters

For residents, the CBUAE protects deposits and consumer rights.
For businesses, it ensures banking reliability and credit availability.
For investors, it underpins currency stability and regulatory confidence.
For the global economy, it positions the UAE as a credible and resilient financial hub.

Its influence extends far beyond interest rates, shaping trust in the UAE’s entire financial architecture.

FAQs

Who is the current Governor of the Central Bank of the UAE?

The Governor is H.E. Khaled Mohamed Balama, appointed to lead the CBUAE and oversee monetary policy, regulation, and financial stability.

What is CBI UAE?

“CBI UAE” is a common misnomer. The correct authority is the Central Bank of the UAE (CBUAE).

What is the role of the Central Bank in the UAE?

The CBUAE manages monetary policy, issues the UAE dirham, regulates banks and insurers, protects consumers, and maintains financial stability.

Who is the biggest bank in the UAE?

By assets, First Abu Dhabi Bank (FAB) is currently the largest bank in the UAE, operating under CBUAE supervision.

How does the CBUAE regulate banks and insurers?

Through licensing, prudential regulations, on-site examinations, enforcement actions, and ongoing supervision aligned with international standards.

How can I file a complaint with the Central Bank of the UAE?

Consumers can submit complaints through the Sanadak portal after first raising the issue with their bank or insurer.

What are the Central Bank of UAE contact details?

Head Office: King Abdullah Bin Abdulaziz Al Saud Street, Al Bateen, Abu Dhabi
Main Contact: +971 2 691 5555
Email: contactus@cbuae.gov.ae

Conclusion

The Central Bank of the United Arab Emirates is not just a regulator; it is the stabilising force behind the UAE’s financial credibility. Through disciplined monetary policy, robust supervision, consumer protection, and forward-looking digital initiatives, the CBUAE ensures that the UAE’s economy remains resilient, trusted, and globally connected.

For anyone engaging with the UAE’s financial system, understanding the CBUAE is not optional – it is foundational.