committed advocate of the basel reform agenda. upon joining the basel committee as an observer in 2014, we became a proactive adopter of global regulatory standards. we are convinced that higher and better quality bank capital is the cornerstone of a sustainable global financial order. the uae has indeed benefitted from the basel committee ’ s outstanding efforts in many ways, supporting the evolution of our financial sector - in terms of its depth, breadth, efficiency and stability. critics who argued that such reforms would derail global economic recovery have been proven wrong. on the contrary, it has been proven that only well - capitalized banks can continuously provide credit through the economic cycle and remain profitable. we subscribe to the need for a good balance between risk sensitivity, comparability, simplicity and – let me add - proportionality - of the global framework. looking back at our own implementation of the basel framework in the uae, we remain conservative in our approach. it takes into account the idiosyncratic risks of our banking system, and the need to mitigate their impact in a way which is appropriate for our jurisdiction : first, a wider macro - prudential overlay is applied to our regulatory framework. to address negative externalities posed by domestic systemically important banks ( dsibs ), capital surcharges are imposed on dsibs. this is largely driven by their concentrated market position, similar business models and entrenched interconnectedness with major counterparties. this surcharge also covers an implicit pillar 2 component, while a detailed design of pillar 2 framework is being finalized. higher capital requirements are also motivated by uae ’ s institutional environment, which presented potential for improvements in areas such as resolution regime for banks and bankruptcy proceedings for corporate borrowers. i am pleased to say that concerted efforts are already underway to address them. additionally, banks have opted to maintain significant capital buffers over and above minimum requirements. as a result, the uae banking system has sustained high level of capitalization, as evidenced by the average leverage ratio of 10. 5 % for the four dsibs. second, the cbuae has issued comprehensive requirements on large exposures, which represent a conservative approach to sovereign risk and limits excessive risk concentrations. past banking crises globally have either led to, were accompanied by or trailed closely behind a sovereign crisis. learning from these lessons, we came up with an appropriate response. we are fully supportive of bcbs ’ s ongoing work on sovereign risk. clearly, ignoring this

opening remarks by h. e. the governor of the central bank of the uae for the 20th international conference of banking supervisors abu dhabi, 28 november 2018 as prepared for delivery esteemed colleagues, ladies and gentlemen, welcome to abu dhabi and to the 20th international conference of banking supervisors ( icbs ). it is a privilege to host all of you during a very special year for the uae. we are celebrating the year of zayed – marking 100 years since the birth of uae ’ s founding father. consistent with the values advocated by the late sheikh zayed, the year of zayed celebrates people of all nationalities, faiths and cultural backgrounds. this event with its global participation is a true reflection of these values. [ introduction ] on this occasion of hosting the icbs conference, let me emphasize that the basel committee ’ s role as an international standard setter has progressively solidified over the years, and its work has become equally important for both developed and emerging market economies. let us remind ourselves of the major shortcomings of the basel framework prior to the global financial crisis – ( 1 ) too little capital with too little going concern loss absorption capacity, ( 2 ) excessive leverage, ( 3 ) neglect of liquidity risks, weaknesses in banks ’ resolvability and ( v ) insufficient macro - prudential considerations. a decade later, tremendous efforts to remedy such fault lines have culminated in a balanced set of common standards – the basel iii. reaching consensus on the necessary reforms was a difficult journey. from broad consensus in 2010 to its finalization seven years later, this achievement required strong determination, leadership and coordination across the globe. i take this opportunity to applaud basel committee ’ s many successes - ( 1 ) strengthening the global financial system, ( 2 ) addressing “ too - big - to fail problem ”, ( 3 ) improving banks ’ risk management, and ( 4 ) providing credible tools to minimize procyclicality of prudential regulations. significant improvements have also been made in home - host cooperation, which is the bedrock of resilience of global financial system and help minimize the scope for regulatory arbitrage. in my remarks today, i will say a few words on our own implementation of basel standards in the uae, followed by a brief focus on several shared challenges for banking supervision that the central bank of the uae ( cbuae ) considers important. [ the uae approach to the basel committee on banking supervision ( bcbs ) standards ] the uae remains a