CBUAE And CBRT Sign Key Agreements To Strengthen Financial Cooperation Between UAE And Türkiye

The Central Bank of the United Arab Emirates (CBUAE) and the Central Bank of the Republic of Türkiye (CBRT) have formalised a bilateral currency swap agreement involving the UAE Dirham (AED) and the Turkish Lira (TRY). This agreement, along with two memorandums of understanding (MoUs), aims to enhance financial cooperation and bolster trade between the two nations.

Signed by Khaled Mohamed Balama, Governor of CBUAE, and Ph.D. Fatih Karahan, Governor of CBRT, these agreements were witnessed by assistant governors and senior officials from both countries. The swap agreement is valued at AED18 billion and TRY198 billion. It is intended to provide local currency liquidity to financial markets, facilitating more efficient cross-border transactions.

The first MoU focuses on promoting the use of AED and TRY in cross-border transactions. It aims to develop the foreign exchange market, facilitate trade and remittances, boost investment, and support economic growth in both countries. This MoU also includes establishing a local currency settlement framework to expand currency use in all transactions.

The second MoU seeks to improve cross-border payment transactions by supporting domestic payment cards in line with regulatory requirements. It encourages sharing expertise in developing central bank digital currency platforms for individuals and institutions. This memorandum outlines integrating UAE’s instant payment platform (Aani) with Türkiye’s FAST system to enhance transaction efficiency.

Khaled Mohamed Balama stated that these agreements demonstrate a commitment to strengthening strategic partnerships in finance, technology, and digital payments. He noted that using local currencies reduces costs and settlement time while boosting trade volumes and financial remittances. "The agreements signed reflect the commitment of the Central Bank of the UAE and the Central Bank of the Republic of Türkiye to work together in supporting the efforts of both nations to further strengthen their strategic partnership to new heights- particularly in the areas of finance, financial technology, and cross-border digital payments," he said.

Fatih Karahan highlighted that these agreements signify a shared dedication to advancing financial cooperation using local currencies. He emphasised their role in fostering trade relations between stakeholders in both countries. "These agreements reflect the shared commitment of both parties to advancing financial cooperation and fostering bilateral trade using local currencies, in support of broader economic relations and sustainable development goals," he remarked.

Future Prospects

The agreements open new avenues for trade and investment between stakeholders in both nations. They aim to accelerate adopting advanced technologies within the financial sector, serving economic interests effectively. The integration of electronic systems will improve interoperability between UAE's Aani platform and Türkiye's FAST system, enhancing operational effectiveness.

Overall, these initiatives are expected to deepen economic ties between UAE and Türkiye by promoting local currency usage for cross-border transactions. By facilitating smoother financial operations, they aim to contribute significantly towards achieving shared economic goals.

With inputs from WAM