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UAE to Back Banks as Dubai Debt Problems Loom


Central Bank of the UAE says it stands behind local and foreign banks that face losses if Dubai defaults on billions of dollars in debt

The Central Bank of the United Arab Emirates says it stands behind local and foreign banks that face losses if Dubai defaults on billions of dollars in debt.

The Central Bank issued a statement Sunday offering banks operating in the Emirates access to additional money. It also said the U.A.E.'s banking system is more sound than it was a year ago.

On Wednesday, Dubai said it would ask creditors to accept a six-month delay in repayments by state-owned holding company Dubai World. It owes about $60 billion.

World stock markets dropped on investors' fears that the Dubai credit crisis could affect emerging economies and European banks that made loans to the Gulf state.

Gulf stock markets will re-open Monday after an extended break for the Muslim holiday of Eid al-Adha.

The debts grow out of Dubai's property boom that produced the world's tallest building and other unique projects. The once rapidly growing city-state has been hit hard by the global financial crisis.

Some information for this report provided by AFP, AP and Reuters.

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