The Central Bank of the United Arab Emirates (CBUAE) said the M1 money supply aggregate increased by 2.3% from Dhs 686 billion at the end of November 2021 to Dhs 701.9 billion at the end of December 2021.
Banks’ gross assets, including bankers’ acceptances, increased by 0.8% from Dhs 3,295.8 billion at the end of November 2021 to Dhs 3,321.5 billion at the end of December 2021, according to the news agency. official WAM.
Gross credit meanwhile increased by 0.3% from Dhs 1,788.3 billion at the end of November 2021 to Dhs 1,794 billion at the end of December 2021. Gross credit increased due to increases of 0.1 % and 2.6% of domestic and foreign credit. credit respectively. The Central Bank added that the growth in domestic credit was mainly due to increases of 0.7%, 1.7% and 7% in credit to the government, the public sector (government-related entities) and non-bank financial institutions. respectively. Credit to the private sector fell by 0.5 percent.
Total bank deposits increased by 1.5% from Dhs 1,966.8 billion at the end of November 2021 to Dhs 1,996.5 billion at the end of December 2021. The increase in total bank deposits is due to the increase in deposits from residents and non-residents. resident deposits by 1.6 percent and 0.6 percent respectively. Residents’ deposits increased due to increases of 8.4%, 2.4% and 5.2% in public sector deposits, private sector deposits and deposits from non-bank financial institutions, respectively. In contrast, public sector deposits fell 6.6%.
The money supply M2 aggregate increased by 3%, from 1,517.1 billion Dhs at the end of November 2021 to 1,563.1 billion Dhs at the end of December 2021.
The money supply M3 aggregate also increased by 1.5%, from 1,830.1 billion Dhs at the end of November 2021 to 1,856.7 billion Dhs at the end of December 2021.
The rise in M1 is due to the increase of MAD 16.6 billion in monetary deposits, canceling out the reduction of MAD 0.7 billion in currency in circulation outside banks. M2 increased due to a high increase in M1 and Dhs 30.1 billion in quasi-monetary deposits. M3 increased due to the increase in M1 and M2, eclipsing the Dhs 19.4 billion fall in government deposits.
The monetary base increased by 4.8% from Dhs 461.7 billion at the end of November 2021 to Dhs 483.9 billion at the end of December 2021. The CBUAE said that the impetus behind this expansion of the monetary base was 8.9% and 35.7%. percent increase respectively in reserve account and current accounts of banks and CFOs and demand deposits of banks in the CBUAE.
In July 2020, the CBUAE launched a new deposit facility for UAE-based conventional banks. The Overnight Deposit Facility allows local banks to deposit their excess liquidity with the CBUAE on an overnight basis.
Read: UAE Central Bank launches new deposit facility for banks
Last month, the CBUAE raised the base rate for the overnight deposit facility by 25 basis points. This followed a decision by the US Federal Reserve Board to raise interest on reserve balances by 25 basis points.
The CBUAE also decided in March to maintain the rate applicable to borrowing short-term cash from the CBUAE through all standing credit facilities at 50 basis points above the base rate.