June 21, 2025
The Central Bank of the UAE (CBUAE) has released its March 2025 monetary and banking indicators, reflecting robust financial growth across multiple aggregates and sectors—pointing toward a resilient and expanding economy that could impact remittance dynamics and investment confidence in the MENA region.
📊 M1 Money Supply Shows Modest Growth
The money supply aggregate M1 rose by 0.4%, reaching AED 986.2 billion by the end of March 2025, up from AED 982.4 billion in February. This increase was primarily driven by a AED 5.1 billion rise in currency in circulation outside banks, which offset a AED 1.4 billion decline in monetary deposits.
📈 Strong Uptick in M2 and M3 Aggregates
The broader M2 money supply jumped 3.3%, from AED 2,360.3 billion to AED 2,437.7 billion, attributed to both the rise in M1 and a significant AED 73.8 billion increase in quasi-monetary deposits.
Meanwhile, M3 grew 2.9%, reaching AED 2,893.7 billion—up from AED 2,811.7 billion in February—fueled by M2’s expansion and an additional AED 4.5 billion in government deposits.
💹 Monetary Base Gains 2.0%
The monetary base experienced a 2.0% rise, climbing from AED 816.6 billion to AED 833.1 billion. The key drivers behind this were a 4.1% increase in currency issued and a dramatic 62.0% growth in reserve accounts. These gains more than offset the declines in current accounts and overnight deposits of banks and OFCs at the CBUAE, which dropped 64.2%, as well as a 6.3% fall in monetary bills and Islamic certificates of deposit.
🏦 Bank Assets and Credit Expand
UAE banks’ gross assets, including bankers’ acceptances, rose 1.9% to AED 4,719.4 billion from AED 4,632.2 billion.
Gross credit followed suit, rising 1.6% to AED 2,240.0 billion. This was the result of a combined growth of AED 19.5 billion in domestic credit and AED 16.2 billion in foreign credit.
Within domestic credit, notable gains were seen in:
- Public sector (GREs): +0.2%
- Private sector: +1.4%
- Non-banking financial institutions: +1.9%
However, credit to the government sector dipped slightly by 0.3%.
💰 Deposits Also on the Rise
Banks’ deposits saw a solid 2.3% increase, reaching AED 2,936.4 billion from AED 2,871.5 billion.
This was primarily led by:
- Resident deposits: +2.4% to AED 2,687.8 billion
- Non-resident deposits: +0.4% to AED 248.6 billion
Within resident deposits:
- Government-related entities: +4.3%
- Private sector: +3.1%
- Non-banking financial institutions: +5.1%
However, government sector deposits fell by 2.3%.
🌍 Implications for the Remittance Sector
These figures highlight strong liquidity and credit growth in the UAE banking system, creating a favorable environment for remittance activity, financial services expansion, and investment inflows. As M1, M2, and M3 continue to grow, the financial system becomes more equipped to support both domestic and international economic engagement—particularly important for migrant workers and global remittance corridors tied to the UAE.
