Monetary Developments

Money supply M0 increased from AED 64.2 billion at the end of February 2014 to AED 65.3 billion at the end of March of the same year (1.7%), while M1 increased from AED 396.6 billion to AED 412.0 billion (3.9%), M2 increased from AED 1,072.4 billion to AED 1,124.3 billion (4.8%), and M3 increased from AED 1,243.5 billion to AED 1,280.2 billion (3.0%). During the first three months of 2014, there has been an increase of 2.2% in M0, 8.5% in M1, 6.4% in M2 and 4.9% in M3.

The Money Multiplier

The money multiplier indicates by how much the money supply will grow following an increase of 1 billion Dirhams in the monetary base (currency in circulation + commercial banks' reserves at the Central Bank + certificates of deposit).
The multiplier of M1 increased from at 1.4 at the end of February 2014 to 1.5 at the end of March 2014, while the multiplier of M2 increased from 3.9 to 4.0 during the same period. However, the money multiplier of M3 remained at 4.5 i.e., at the same level of the previous month. The increase in the money multiplier of M2 and M3 was mainly due to an increase in monetary aggregate M1 by AED 15.4 billion and monetary aggregate M2 by AED 51.9 billion, which offset an increase in monetary base of AED 8.8 billion during the month of March 2014.

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