Has the UAE Central Bank Followed an Active Monetary Policy During the COVID-19 Crisis?

The COVID-19 crisis has disrupted the UAE's economy, while the declining oil prices have slashed any hopes of a timely recovery. In response, the government has deployed significant rescue packages, such as Targeted Economic Support Scheme (TESS). This paper argues that such stimulus packages have not been adequate, given the extent of the UAE's reliance on international finance and trade. Most significantly, the UAE's fixed exchange rate regime implies that the central bank lacks monetary autonomy to support its domestic economy adequately. The pandemic highlights the need for structural reforms towards a more closed economy. For instance, restricting the free flow of international capital would allow the nation to adopt a floating exchange rate and reduce its reliance on the global market. In the meantime, it gives back the central bank's autonomy to design monetary policy based on the economic and financial needs of the UAE. Recent studies demonstrate emerging economies' tendency to lean towards more, rather than less, financial liberalization even after a global crisis. However, with more frequent international shocks and antiglobalization trends worldwide, the UAE should consider reforms that steer the country towards a more closed economy