DUBAI: The UAE government is freeing up more cash to boost the local economy after it cut by half the reserve requirement for demand deposits, giving local lenders a wider latitude in managing their money amid the coronavirus pandemic. The new reserve requirement for demand deposits for all banks, one of the monetary tools used to control liquidity in the financial system, which was lowered to seven percent from 14 percent will resulted into an additional Dh61 billion in the economy, the Central Bank of the UAE said. The additional liquidity can be “be used to support banks’ lending to the UAE economy and their liquidity management,” the central monetary agency said. The UAE central bank likewise extended the duration of the Dh100 billion Targeted Economic Support Scheme (TESS) for affected retail and corporate customers, and also made other enhancements to the scheme announced last month. Banks and finance companies participating in the TESS program will be able to extend to their customers’ deferrals of principal and interest as well as zero-cost funding facility until December 31, 2020, and were also allowed to move their capital buffer relief to the end of 2021. Banks participating in the TESS program will be able to use a third of their current regulatory liquidity buffers, the central bank said. Monetary authorities also said that the planned implementation of certain Basel III capital standards will be postponed to March 31, 2021 for all banks, “to minimize the operational burden on the financial industry during this challenging period.” “In collaboration with the two regulatory authorities of Financial Free Zones, FSRA and DFSA, the CBUAE has issued guidance for banks and finance companies on the implementation of the financial reporting standard, IFRS 9. It enables banks and finance companies to employ the flexibility embedded in the framework, while effectively ensuring compliance and consistency.”