CBUAE reported M1 money supply rose 2.3 percent to $257.7 billion by December 2024
The Central Bank of the UAE (CBUAE) has revealed that gross banks’ assets, which include bankers’ acceptances, increased by 2.4 percent, rising from AED4,451.4 billion at the end of November 2024 to AED4,560.0 billion ($1.24 billion) by the end of December 2024. Meanwhile, gross credit experienced a modest increase of 0.8 percent, moving from AED2,163.4 billion at the end of November 2024 to AED2,181.1 billion at the end of December 2024. This rise in gross credit was primarily fueled by an 8.3 percent increase in foreign credit, which overshadowed a 0.4 percent decline in domestic credit.
Domestic credit saw a decrease due to reductions in credit to public sector entities by 2.5 percent, a 0.2 percent drop in private sector credit, and a 2.5 percent decline in credit to non-banking financial institutions. Conversely, credit to the government sector rose by 1.6 percent.
CBUAE further highlighted a notable rise in money supply aggregate M1 by 2.3 percent, elevating it from AED924.8 billion ($257.7 billion) at the end of November 2024 to AED946.4 billion by the close of December 2024. This increase was primarily driven by AED1.1 billion growth in currency circulation outside banks and a significant AED20.6 billion rise in monetary deposits.
Breakdown of money supply aggregates
The money supply aggregate M2 saw an increase of 1.7 percent, growing from AED2,278.9 billion ($626.2 billion) at the end of November 2024 to AED2,317.5 billion ($618 billion) by the end of December 2024. This rise in M2 can be attributed to the heightened M1 levels, along with an AED17.0 billion increase in Quasi-Monetary Deposits.
According to the Monetary & Banking Developments report for December 2024, released by the apex bank today, the money supply aggregate M3 also experienced a growth of 0.4 percent, moving from AED2,767.4 billion at the end of November 2024 to AED2,778.9 billion at the end of December 2024. This increase in M3 was largely due to the growth in M2, which more than compensated for an AED27.1 billion decline in government deposits.
Changes in the monetary base
The monetary base recorded a growth of 4.4 percent, increasing from AED748.0 billion at the end of November 2024 to AED780.6 billion at the end of December 2024. This expansion in the monetary base was propelled by a 0.1 percent rise in currency issued, a 0.6 percent increase in reserve accounts, a significant 23.7 percent rise in banks and OFCs’ current accounts, and overnight deposits held at CBUAE, along with a 4.1 percent increase in monetary bills and Islamic certificates of deposit.
Read more: CBUAE first Central Bank in region to sign Statement of Commitment to FX Global Code
Growth in banks’ deposits
Finally, banks’ deposits increased by 1.5 percent, moving from AED2,804.4 billion at the end of November 2024 to AED2,847.0 billion at the end of December 2024. This growth in bank deposits was largely driven by increases in resident deposits by 0.5 percent and non-resident deposits by 13.9 percent. Resident deposits saw growth, attributed to a 4.2 percent increase in government-related entities’ deposits, a 0.9 percent rise in private sector deposits, and a remarkable 16.5 percent increase in deposits from non-banking financial institutions, despite a 5.2 percent decline in government sector deposits.
