After the creation of the United Arab Emirates in 1971, a ‘Currency Board’ was established in May 1973, as per Union Law No. of 1973. The Currency Board was mandated to issue the national currency that replaced the Bahraini Dinar and the Qatari and Dubai Riyal currencies in use at the time.
The Currency Board’s functions were limited to issuing the UAE Dirham and ensuring its full coverage in gold and foreign currencies. The value of the UAE Dirham in gold stood at 0.186621 grams and it was pegged to the US Dollar at a rate of 3.94737 to a dollar, within a narrow margin.
Despite its limited mandate, the Currency Board was instrumental in ensuring the efficient organizationand soundness of the banking sector.With technical support from the International Monetary Fund, the Currency Board prepared collected and classified detailed monetary and banking statistics. The Currency Board also issued annual reports and bi-annual economic bulletins.
On 10 December 1980, “Union Law No.of 1980 Concerning The Central Bank , The Monetary System And Organization of Banking” was issued, creating the Central Bank of the UAE and providing the Central Bank with authority over the organisation of the monetary and banking systems in the UAE. This includes the organization of monetary, credit and banking policy in the UAE and the supervision of its implementation.The Central Bank’s mandate includes : issuing of the currency, as per the provisions of the said law; stability of the currency as well as its free convertibility into foreign currencies; credit policy to achieve balanced growth of the national economy;organization and development of banking as well as monitoring of the efficiency of the banking system; function as the Bank of the Government; offering monetary and financial advice to the people.
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