Legislation Details
- Full Title: Federal Decree by Establishing and Regulating the Financial Stability Board
- Law Type: Federal Decree
- Law Number: [no number] of 2023
- Issued Date: 04 Sep 2023
- Effective Date: 16 Sep 2023
- Official Gazette: No. 759
- Sector: Government Affairs
- Status: Active
- Number of Articles: 46
- Chapters/Parts: 0
- Amendments: 0
Summary
This Federal Decree establishes and regulates the Financial Stability Board (FSB) in the United Arab Emirates. The FSB is an independent body affiliated with the UAE Cabinet, tasked with reinforcing and protecting financial stability at the national level. It aims to facilitate cooperation between financial regulatory authorities, identify systemic risks, and provide recommendations to mitigate such risks. The FSB also plays a role in enhancing the readiness of authorities to manage financial crises and promoting public awareness on financial stability. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Arts. 3, 5, 6) The law is significant for businesses and individuals in the UAE, as the FSB's activities and decisions can directly impact the financial system and economic stability. Its role in identifying systemic risks, proposing regulatory measures, and coordinating crisis management efforts are crucial for maintaining a resilient and sustainable financial environment in the country. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Arts. 5, 6)
What is the scope and purpose of this law?
The provisions of this Federal Decree apply to the Financial Regulatory Authorities and Other Authorities, including financial services authorities in the UAE's financial free zones. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 2) The purpose of this law is to establish the Financial Stability Board (FSB) and define its objectives, which include: 1. Reinforcing and protecting financial stability at the UAE level. 2. Facilitating cooperation between the Financial Regulatory Authorities and the Other Authorities. 3. Identifying risks and providing recommendations to mitigate systemic risks in the financial system. 4. Reinforcing discipline in the financial system. 5. Ensuring the financial system's effective contribution to sustainable economic development. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 5)
What are the key definitions under this law?
The law provides the following key definitions:
- State: United Arab Emirates
- Cabinet: The Cabinet of the UAE
- FSB: Financial Stability Board
- Board of Directors (BOD): FSB Board of Directors
- Chairman: Chairman of the FSB Board of Directors
- Secretary General: FSB Secretary-General
- Ministry: Ministry of Finance (MoF)
- The Central Bank: The Central Bank of the United Arab Emirates
- Financial Department: The department concerned with the financial issues in the local Emirate
- Financial Regulatory Authorities: The Central Bank, the Securities and Commodities Authority, the Financial Services Regulatory Authority of the Abu Dhabi Global Market, the Dubai Financial Services Authority, or any financial regulatory authority added by virtue of a Cabinet resolution
- Other Authorities: Federal and local government agencies related to financial stability in the UAE, determined by a Cabinet resolution
- Financial Free Zones: The free zones subject to the provisions of Federal Law No. (8) of 2004 regarding Financial Free Zones
- Financial Stability: The state in which the UAE financial system is able to protect the macroeconomy from financial crises, manage financial risks, and absorb shocks
- Financial System: The sum of laws, regulatory and technical procedures, financial institutions, financial markets, financial infrastructure, and individuals, interacting for the purpose of moving money towards investment or consumption, and providing facilities, including payment systems, to finance economic and commercial activity
- Systemically Important Institutions: Financial institutions licensed by the Financial Regulatory Authorities whose failure leads to risks to the financial system in the UAE
- Financial Infrastructure Systems: The clearing, settlement, and payment systems established, operated, licensed, or subject to the supervision of any of the Financial Regulatory Authorities
(Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 1)
What are the main obligations and requirements?
The key obligations and requirements under this law include: 1. The Financial Regulatory Authorities and Other Authorities, including financial services authorities in the UAE's financial free zones, are subject to the provisions of this Federal Decree. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 2) 2. The FSB is required to propose financial controls and rules, and additional regulations and legislation supporting the Financial Regulatory Authorities and Other Authorities, necessary to protect financial stability and respond to existing and emerging risks. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 6(1)) 3. The FSB must follow up on developments in the financial system and local and international financial markets, and identify weaknesses and potential systemic risks in the financial system, providing recommendations and advice to the Board of Directors. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 6(3-4)) 4. The FSB is required to monitor the application of financial stability policy measures and procedures by the financial supervisory authorities and Other Authorities, assess their adequacy, and make recommendations. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 6(5)) 5. The FSB must enhance the readiness of Financial Regulatory Authorities and Other Authorities to manage financial crises, in cooperation with the authorities related to crisis and disaster management in the UAE. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 6(6))
Which authorities or bodies are responsible for enforcement?
The key authorities and bodies responsible for the enforcement and governance of this law are: 1. The Cabinet: The Cabinet is responsible for approving the addition of Financial Regulatory Authorities and Other Authorities to which the provisions of this law apply, based on a proposal by the FSB Chairman. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Arts. 7(4), 8(3-4)) 2. The FSB Board of Directors (BOD): The BOD is responsible for managing the FSB and exercising all the powers and authorities necessary to enable the FSB to achieve its objectives. This includes submitting proposals to the Cabinet, issuing bylaws and regulations, forming committees and work teams, and establishing various mechanisms related to data exchange, professional conduct, and governance. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Arts. 7-8) 3. The Chairman: The Chairman of the FSB BOD is responsible for various duties, including replacing the Minister of State for Financial Affairs in the event of absence or impediment, and issuing the bylaws regulating the BOD's work. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Arts. 7(2), 7(5)) 4. The Secretary-General: The Secretary-General is responsible for the executive management of the FSB and exercising the competencies and powers delegated by the BOD. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 12)
How does this law interact with other UAE legislation?
This Federal Decree does not explicitly mention any other UAE legislation that it repeals or amends. However, it does state that the provisions of this law apply to the financial services authorities in the UAE's financial free zones, which are subject to the provisions of Federal Law No. (8) of 2004 regarding Financial Free Zones, or any other law in replacement thereof. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023, Art. 2)
When did this law come into effect?
This Federal Decree by Establishing and Regulating the Financial Stability Board came into effect on 16 September 2023, as stated in the "Effective Date" section of the legislation details. (Federal Decree by Establishing and Regulating the Financial Stability Board, 2023)
Source Documents
This article analyses Federal Decree by Establishing and Regulating the Financial Stability Board for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.