UAE Central Bank Announces AED 71.2 Billion Increase In Cash Deposits

The Central Bank of the UAE (CBUAE) has announced a significant uptick in the financial sector, with cash deposits reaching AED725.8 billion in February 2024, marking an 11 percent annual increase from AED654.6 billion in February 2023. This growth reflects a robust economic environment and increased banking activity within the country.

On a month-to-month basis, cash deposits saw a rise of 1.92 percent or AED13.7 billion from approximately AED712.1 billion in January 2024. The report further detailed that quasi-cash deposits, encompassing term and savings deposits in dirhams for residents as well as deposits by residents in foreign currencies, surged to AED1.258 trillion in February 2024. This represents a substantial 27.4 percent increase year-on-year from AED987.4 billion in February 2023.

Government deposits also showed positive momentum, escalating to AED430.3 billion in February of 2024, up by 11.1 percent compared to AED387.3 billion in the same month the previous year. This growth indicates an increasing level of government confidence and investment in the nation's banking sector.

The overall money supply expanded significantly, reaching approximately AED139.4 billion at the end of February 2024, with a notable year-on-year increase of 12.8 percent from around AED123.6 billion in February 2023. The distribution of this supply includes AED18.2 billion for cash in banks and AED121.2 billion for circulating cash outside banks.

Moreover, the monetary base witnessed a remarkable annual growth of 28.3 percent to stand at AED689.5 billion in February 2024, up from about AED537.4 billion in February 2023. This growth was partly attributed to the Central Bank's decision to increase banks' reserve requirements for demand deposits from 7 percent to 11 percent starting April 2023, which contributed to monthly increases in reserve accounts, current accounts, and overnight deposits for banks at the Central Bank.

The monetary base's composition includes approximately AED257 billion for cash certificates and Islamic deposit certificates, AED111 billion for current accounts for banks and other financial institutions at the Central Bank, as well as overnight deposits for banks at the Central Bank, and AED139.4 billion for the money supply.

This financial growth underscores the UAE's economic resilience and the banking sector's robust performance amidst global economic fluctuations. It reflects the Central Bank's effective regulatory measures and its commitment to maintaining financial stability and fostering a conducive environment for economic growth.

With inputs from WAM