UAE – Mubasher: The Central Bank of the UAE (CBUAE) and the National Bank of Ethiopia (NBE) have signed a bilateral currency swap agreement for the UAE Dirham and Ethiopian Birr.
The agreement allows the CBUAE and the NBE to swap local currencies with a nominal value of up to AED 3 billion and ETB 46 billion, according to the Emirates News Agency (WAM).
This enhances financial and commercial cooperation between the UAE and Ethiopia by providing liquidity in local currencies to financial markets, facilitating more efficient settlement of cross-border transactions.
The two parties also signed two memoranda of understanding (MoUs) to establish frameworks for using local currencies in cross-border settlements and linking their payment and messaging systems.
Under the first MoU, the CBUAE and NBE will promote the use of their currencies for transactions between the UAE and Ethiopia.
This MoU includes measures to facilitate the use of local currencies in commercial transactions, encourage financial and banking cooperation through knowledge-sharing, support financial market development, facilitate bilateral trade, and bolster direct investment.
The second MoU involves cooperation in payment platform services and electronic switches by linking their instant payment systems, national card switches (UAESWITCH and ETHSWITCH), and messaging systems, adhering to each country's regulatory requirements.
This also includes collaboration in financial technology and central bank digital currencies.
Khaled Mohamed Balama, Governor of the CBUAE, said: “Swapping the currencies of the two countries and utilising local currencies to settle cross-border transactions and enhancing the cooperation in interlinking instant payment systems, electronic switches and messaging systems will enhance economic, trade, and investment prospects.”
Mamo E. Mihretu, Governor of the NBE, stated: “Both the bilateral currency swap agreement and the MOUs signed today are a testament to the shared commitment of the two countries to further deepen our already close bilateral partnership, to facilitate sustainable development and a prosperous future.”
