CBUAE: Monetary & Banking Developments – May 2023
The Central Bank (CBUAE) announced that the Money Supply aggregate M1 increased by 3.4%, from AED 775.2 billion at the end of April 2023 to AED 801.4 billion at the end of May 2023. This was due to an AED 28.6 billion increase in Monetary Deposits. On the other hand, there was an AED 2.4 billion fall in Currency in Circulation Outside Banks.
The Money Supply aggregate M2 climbed by 1.7%, from AED 1,823.7 billion at the end of April 2023 to AED 1,855.3 billion at the end of May 2023. M2 rose due to an elevated M1, and an AED 5.4 billion rise in Quasi-Monetary Deposits.
The Money Supply aggregate M3 also soared by 1.2%, from AED 2,245.1 billion at the end of April 2023 to AED 2,272.7 billion at the end of May 2023. M3 increased because of a raised M2, overshadowing an AED 4.0 billion reduction in Government Deposits.
The Monetary Base grew by 3.4%, climbing from AED 600.7 billion at the end of April 2023 to AED 621.4 billion at the end of May 2023. The main drivers of this expansion of the Monetary Base were increases in Banks & OFCs’ Current Accounts & Overnight Deposits of Banks at CBUAE and Monetary Bills & Islamic Certificates of Deposit by 96.1% and 4.4%, respectively. These increases overrode the reduction in Currency Issued by 2.6% and in Reserve Account by 30.0%.
Gross banks’ assets, including bankers’ acceptances, rose by 1.7%, from AED 3,802.7 billion at the end of April 2023 to AED 3,868.9 billion at the end of May 2023.
Gross credit increased by 1.6% from AED 1,897.0 billion at the end of April 2023 to AED 1,927.7 billion at the end of May 2023. Gross Credit rose due to 1.7% growth in Domestic Credit and 0.7% rise in Foreign Credit.
Domestic Credit expanded because of 3.2% and 1.9% increases in credit to the Public Sector (Government Related Entities) and Private Sector, correspondingly. Whereas, credit to the overnment Sector and Non- Banking Financial Institutions declined by 0.8% and 1.7%, respectively.
Total Bank Deposits increased by 2.3%, rising from AED 2,350.9 billion at the end of April 2023 to AED 2,405.9 billion at the end of May 2023. The growth in Total Bank Deposits was due to increases in Resident Deposits by 1.5% and Non-Resident Deposits by 11.1%. Resident Deposits rose owing to increases in Private Sector Deposits and Non-Banking Financial Institutions’
Deposits by 2.3% and 1.9%, respectively. However, Government Sector deposits fell by 0.5% and Public Sector (Government Related Entities) Deposits decreased by 0.4%.
M 1 = Currency in circulation outside Banks + Monetary Deposits (current accounts and call accounts at banks).
M2 = M1 + Quasi-monetary Deposits (resident time and saving deposits in Dirhams and resident deposits in foreign currencies).
M3 = M2 + Government Deposits at banks operating in the UAE as well as at the Central Bank.
