"RECOMMENDATIONSFrom the above arguments against liberalization of the banking sector it can be noted that for an effectiveimpact of liberalization of the banking sector the UAE should adopt effective measures. The bankingsector in the UAE consists of commercial and Islamic banks and various researches discussed above havestated that the banking sector has effectively after liberalization. The important trade policy of the UAE isbased on the concept of openness to global market and economic freedom. The UAE reinforced thispolicy and joined the world trade organization as early as possible as the WTO?s first Arab member. Oneof the important industries it planned to expand and open to the global market is the banking industry.Even tough, the banking sector has improved with greatly with liberalization, yet there are areas it needsto improve. The current section discusses recommendations to these areas of improvement with the helpof assessment analysis by the IMF staff and works of other authors. The recommendations are *Increasein the level of liberalization and opens to the global market will help banks in increasing their costefficiency and help them in providing cheaper services to the client. As the Islamic banks are the increasing importance of the UAE Banking System, the central bank shouldimplement measures to develop the market for government or shariah- complaint instruments, or CBU- backed instruments which would help the Islamic banks with liquidity management because CBU doesnot have an instrument for giving short - term liquidity to Islamic banks. Additionally, it is recommended that the CBU develop its supervisory capacities over the Islamic banksespecially by improving the required skills and also recruit a core set of staff (specialized) within thesupervision department of the bank. With the aim to meet global changes by adopting the Basel II banking standards, the UAE Banking sectorhas a higher decree compliance with the Basel core principles for supervising the banks.However,CBUhas to overcomeweakness including improve distance standard and transparency implement measures tomanage conflict of interest, make the directors to understand clearly what is expected of them,among 65 other matters. The UAE banks have already accepted the need to improve in these areas and many bankshave started journeying along. The new challenges include foreign competition especially in the area oftechnology expertise, electronic banking, and providing financial and customer services such as instantloans and loan payment procedure.The findings of the IMF staff assessment of the UAE?s observance of the IMF?s Code of Good Practicesof Transparency in both the monetary and financial policies have been mixed.While assessing theUAE?s observance the IMF staff had assessed the areas of banking supervision, monetary policies andpayment systems.In addition to many other recommendations for overcoming the weaknesses and challenges the IMF staffrecommended the CBU to take measures to enhance the prudential regulations and to monitor the bankingsector exposure to the real estate. Even though, the CBU has planned to revise its classifications of thebanking exposure to the real estate. There have been many appropriate measures taken by the CBU andthere is yet more prudential oversight to increase the exposure of banks to the real estates. The IMF staffrecommended continued improvements by introducing more prudential regulations such as maximumloan-to-value and debt-to-regulations ratios. Further, the IMF staff recommends the CBU to improve theloan classification sector wise and enhance the oversight of the non-banking institutions that are involvedin the real estate management.The CBU should publish circulars and issue guidelines to necessitate banks to have adequate procedures66 and policies to measure, identify and control market risks (CP 13) and also must introduce explicitcomprehensive risk management process for banks such that it helped to identify, control and measure the67 material risks (CP 15). 65Draft -Corporate Governance Guide for UAE Bank directors, June 2006 -revised; www.centralbank.ae/pdf/draft-cgguidlines.pdf 66The U.A.E. were assessed as compliant or largely compliant with 27 principles and materially noncompliant with 3 principles ( CP 1.6, CP 4and CP 13)67(2001 FSAP) Further, with the plan to implement the Basel IIAccord (CP6), the CBU formed a working group in2005. The CBU made a detail analysis and also every bank?s diagnostic review by February 2006 andlater announced its plan to implement the Basel II by December, 2007. To pursue and finalize theimplementation of the Basel II the CBU is recommended to issue necessary guidelines to all its membersand also continue to train the bank staff to prepare themselves for the IRB approach and put in a salarypackage to attract specialized professionals.Even though, the local banks in the UAE are wealthier, they still need to set a benchmark themselves tocope with the fiercer competition they face due to entry of foreign banks and also need to catch up withthe banking practices followed internationally. At micro level the local banks of the UAE have therequirement to adopt new growing strategies to achieve scale of economy, opting new consolidationsventures to be abreast with the international developments, and taking lead initiatives in new perspectivefull investment ventures only in the promising but in different sectors. The banks should also takemeasures to improve its productivity by upgrading their credit assessment, improving risk management,and use of the available credit worthiness information efficiently, should also develop modern bankingsystem, adopt new-technologies based on services, and improve their marketing strategies.From the macro level perspective the local banks have to enforce regulations and monitor competitionpolicies. Generally, the concept of liberalization has both implications foreseen and unforeseen on bank?srevenue such as the costs, efficiency, risk level and their future outlook consequently, among other things.The banks have to take measures to face the competition of faster growth of the economy and alsoimprove their customer services by diversifying their products, services and market.With the introduction of liberalization the UAE banking sector will be completely engaged in the racetrying to offer better and faster services to the customers. To overcome this competition the local banks are given required incentive and in the long run the larger local banks can opt to consolidate or merger68 with the other banks rather than investing money to spend on advertising and marketing.After joining the WTO, the UAE began taking steps to facilitate and attract foreign investment in theUAE and began trending towards liberalization. These include establishment of the free zones and reforminitiatives continuously. This initiative taken by the UAE to liberalize has become integral part of thegeneral trend to adopt harmonized approach to attract more foreign investment into the Middle Eastregion. In trending towards liberalization the move to attract foreign investors and establishment offoreign banks has driven the requirement to diversify the economy of the UAE, foster private sectorgrowth, effective training, and create employment for nationals. The only drawback in this trending is thatin comparison to the GCC and the Middle East nations that have enacted new strategies and regimes toattract foreign investments, the UAE still relies on older practices and legislations. Many countries in theMiddle East and part of the GCC have successfully enacted laws that tailored foreign investments in theserecent years. Thus, it is being hoped that the UAE regulatory structure also adopts these tailoringliberalization laws to attract more foreign investments and also facilitate inbound investments from the69 foreign companies and recognize the current global business practices in the coming months.Additionally, the entry of foreign banks into the UAE?s economy has also led to competition in thebanking sector and it is recommended that the banks understand the customer demands and alsounderstand to what extent relations with particular customers are profitable. It is also essential that banksmainly focus on serving the client effectively, providing quality services, and adopts innovations in theproducts offered. This approach will definitely help the banks in creating new charges, interest incomes,70 fees and possibly FX-related profits.68Same note as 369“Foreign Investments in the United Arab Emirates,” Linklaters, 201170Moukahal Wissam, “The banking industry in the UAE,” Deloitte UAE, 2011 CONCLUSIONFrom the above study it can be observed that financial services play a crucial role in thedevelopment and growth of the productivity of the economy. Participation of foreign banksspurred with the liberalization of the financial sector has helped a lot in improving the efficiencyof the host countries and the UAE being the main topic of our discussion has definitely made astart by becoming the member of the WTO in 1996 and allowing foreign investment during the2000.From the above study and analysis it can be understood that the banking sector of the UAE hasimplemented many measures to adapt the obligations under the GATS provisions. Further, it canalso be understood that the CBU has taken effective measures to help all the banks in the UAEboth commercial and Islamic to work effectively and adapt to the different obligations of theGATS.The CBU had also played a very important role in reorganization the banking sector to succeedin the competition that it would be facing with the entry of new foreign banks into the servicesector and also to improve consumer confidence. In addition to the CBU reforms and regulationthe DIFC had also played a prominent role in being the catalyst in attracting the internationallyfamous commercial banks and financial sectors in to the UAE economy. When reading throughthe analysis discussed above it can be noted that in comparison to all the GCC and the MiddleEast nation?s the UAE banks have performed better and only Kuwait banks have performedgenerally better in comparison to the UAE banks.From the arguments section it can be noted that many were not in the favor of the liberalizationof the banking sector but in order to expand its market and increase opportunities the UAE "