The UAE will not follow Qatar in banning conventional banks from operating Islamic services, as its financial system has a different legal framework, says the Central Bank Governor.
Conventional banks will remain free to offer Sharia-compliant banking products, said Sultan al Suwaidi.
"They can offer products; if they want to offer Islamic or conventional, it's up to them," Mr al Suwaidi said. "We don't have the same system to undo as Qatar undid."
Last month Qatar's central bank asked conventional lenders to close down their Islamic operations because of concerns about an overlap between the two.
This caused concern among banks in the region that offer services abiding by Sharia law.
Interest in Islamic finance is growing globally. Assets held by Islamic finance companies are tipped by Moody's Investors Service to swell fivefold to more than US$5 trillion (Dh18.36tn) in the near future.
But the sector has little international standardisation, leaving individual countries to adopt their own rules.
Qatar has separate laws governing conventional banks and Islamic lenders but UAE banks are governed by the same legislation.
Conventional banks operating in the UAE offer both products.
"Markets like the UAE and Saudi Arabia have a single banking act and there's no segregation between the two," said the head of Islamic finance for a UAE bank, who asked to remain anonymous.
In Saudi Arabia, the central bank treats conventional and Islamic banks equally. Bahrain's central bank was the first to impose the standard rules of accounting and auditing organisation for Islamic Financial Institutions (AAOIFI) across all Islamic banks.
Islamic finance banks based in the Dubai International Financial Centre are required to operate within AAOIFI guidelines.