UAE, Seychelles Forge New Paths With MoUs On Local Currencies And Payment Systems

Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE), and Caroline Abel, Governor of the Central Bank of Seychelles (CBS), signed two Memorandums of Understanding (MoUs) in Abu Dhabi. These agreements aim to enhance the use of local currencies for cross-border transactions and interlink payment systems between the two nations.

The first MoU focuses on establishing a framework to promote local currencies in bilateral commercial transactions. This includes developing the exchange market, facilitating trade and direct investment, remittance settlement, and financial market development. The agreement aims to ease the settlement of commercial transactions using the UAE dirham and Seychellois rupee, adhering to each country's laws.

Under this MoU, both countries will benefit from reduced costs and time savings in settling transactions. This will help develop the foreign exchange market for both currencies, enhancing trade exchanges, investments, and remittances between the UAE and Seychelles.

The second MoU aims to consolidate cooperation by linking instant payment platforms, electronic switches, and messaging systems directly. This includes interlinking the Instant Payments Platform (IPP) developed by CBUAE with a similar platform in Seychelles. The goal is to facilitate mutual acceptance of local cards and process their transactions efficiently.

This agreement also explores linking messaging systems and cooperation in FinTech and Central Bank Digital Currencies. By doing so, it aims to modernise and develop national payment systems in line with digital economy agendas.

Commenting on the occasion, Balama said that signing these MoUs reflects CBUAE's commitment to expanding relations with regional and international counterparts. "The use of the two countries' currencies for cross-border financial and commercial transactions reflects growing trade, investment, and financial cooperation," he explained.

Caroline Abel highlighted the significance of an efficient financial system for small open island economies like Seychelles. She stated that these MoUs would assist in safeguarding the soundness and integrity of their respective financial systems while promoting trade relations between stakeholders across both jurisdictions.

"For small open island economies like Seychelles, the importance of an effective and efficient financial system to facilitate trade cannot be overemphasised," Abel said. She added that developing a framework for using UAE Dirhams and Seychelles Rupees in cross-border transactions could further facilitate trade relations.

Abel also noted that collaborating on interlinking payment systems aligns with Seychelles' efforts to modernise its national payment system as part of its digital economy agenda. "The opportunity to collaborate on interlinking our payment and messaging systems will facilitate processing and settlement of cross-border financial transactions between the two countries," she said.

These agreements mark a significant step towards strengthening economic ties between the UAE and Seychelles through enhanced financial cooperation.

With inputs from WAM