The United Arab Emirates central bank will introduce an official interbank offered benchmark rate mechanism in the first half of September, a treasury official said on Wednesday.

'To finalise the project it will probably take until the first half of September,' Mohamed Al-Tamimi, assistant executive director of the central bank's treasury department told Reuters.

The central bank said earlier this month it was mulling the introduction of a new Emirates interbank offered rate mechanism, citing its concern that current rates did not reflect the market.

The bank will apply its official overnight repo rate for one month, instead of one week, to make it easier for banks to utilise the facility and in an effort to bring down interbank lending rates, Al-Tamimi said.

The change comes into effect on Wednesday. -Reuters