DUBAI, Nov 16 (Reuters) - The central bank of the United Arab Emirates is closely monitoring the banking sector to ensure risks including lower oil prices and customer deposits do not escalate into a wider problem, the bank's governor said on Monday.
"With the major stakeholders, the central bank is closely monitoring the financial soundness indicators for the banking sector to make sure potential vulnerabilities are identified and appropriate measures are taken on time to hedge against risks that could escalate to a full-blown crisis as our experience has taught us," Mubarak Rashid al-Mansouri told a banking conference in Dubai.
Mansouri added among the main challenges for the banking system were lower oil prices, which could lead to further fiscal consolidation, and further tightening in bank liquidity due to a slowdown in customer deposit levels.
Speaking on interest rates, Mansouri said the "immediate impact on our side will be an appropriate adjustment of our ... rates, especially at the short end."
He added the UAE continued to be committed to its exchange rate peg with the U.S. dollar.
Reporting by Tom Arnold; Writing by David French; Editing by Sam Holmes