UAE financial system shows engineered resilience amid global volatility
Strong liquidity, vast reserves, and strategic design keep markets steady in 2025
Dubai: In financial markets, resilience is not declared — it is proven. In 2025, the UAE’s financial system has proven it once more. Markets have remained strong, liquidity buffers intact, and investor confidence unshaken. This is not a coincidence. It is design.
Over the course of this year, UAE stock indices have pushed higher, with Abu Dhabi registering steady gains and Dubai climbing to a 17-year high. These movements occurred while global markets were wrestling with volatility. This is not the profile of a fragile market. It is the footprint of a system built on depth, structure, and confidence.
Markets can move on headlines for a day, but they do not reach long-term highs unless liquidity and fundamentals are real.
If the collapse of Silicon Valley Bank in early 2023 taught the world one thing, it is that liquidity is non-negotiable. Banks collapse when liquidity fails, not when assets underperform. The UAE’s banking industry has taken the opposite path. Latest data show Loan-to-deposit ratios remain conservative. Liquidity Coverage Ratios and Stable Funding profiles consistently exceed global benchmarks. This is resilience in practice: the ability to absorb pressure without spreading panic.
Even during moments of heightened tensions between the U.S. and Iran, the UAE markets showed discipline. Equity indices held firm and more importantly, Dirham FX derivatives and spread of Credit Default Swaps (CDS) moved only marginally. Both of these instruments are sensitive to stress, with the latter being a key barometer for policy makers, investors, and regulators to assess a government's underlying riskiness. Their muted response is the clearest signal: confidence in the UAE’s financial system runs deeper than short-term headlines.
What reinforces this resilience is scale. The UAE’s sovereign wealth and public pension assets now exceed USD 2.4 trillion, the third largest globally after the U.S. and China. This is not just a number; it is confidence capital. In a moment of global stress, investors and counterparties know that behind the market lies one of the largest reserve positions in the world. That is why capital continues to flow into the UAE, even when other markets see outflows.
But reserves and liquidity alone do not explain the UAE’s position. What makes the system distinct is their strategy:
Diversification: Non-oil sectors continue to expand, from trade to real estate to technology, now contributing to 75.5% of the national GDP.
Regulatory vigilance: Capital and liquidity buffers are enforced not just for compliance, but for durability.
Future readiness: Investments in AI, digital finance and settlement infrastructure ensure competitiveness for the years ahead.
This is not strength by chance. It is stability engineered into the design of the economy and financial system.
In 2025, the message from the UAE’s financial system is clear. Liquidity is strong, reserves are vast, and markets are calm even under regional tension.
This is true resilience — not fragile, not accidental, but deliberately constructed, maintained, and scaled.
- The writer is Head of Treasury Markets, Standard Chartered
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