CBUAE and NBE Sign Currency Swap Agreement and MoUs to Boost Financial Cooperation

UAE, 17 July, 2024 : The Central Bank of the UAE (CBUAE) and the National Bank of Ethiopia (NBE) have signed a bilateral currency swap agreement and two Memorandums of Understanding (MoUs) to promote the use of domestic currencies and interlink their payment and messaging systems.

The currency swap agreement allows the CBUAE and the NBE to exchange local currencies up to AED 3 billion and ETB 46 billion. This initiative aims to enhance financial and commercial cooperation by providing liquidity in local currencies, thereby enabling more efficient settlement of cross-border transactions.

Under the first MoU, the CBUAE and the NBE will work together to promote the use of their respective currencies in cross-border transactions. This includes measures to facilitate the settlement of commercial transactions, encourage financial and banking cooperation through knowledge-sharing, and support the development of financial markets. The MoU is expected to bolster bilateral trade and direct investment.

The second MoU focuses on interlinking the instant payment systems, national card switches (UAESWITCH and ETHSWITCH), and messaging systems of both countries. This cooperation will also extend to financial technology and central bank digital currencies, aligning with regulatory requirements.

H.E. Khaled Mohamed Balama, Governor of the CBUAE, stated that these agreements reflect the strong economic cooperation between the UAE and Ethiopia, particularly in trade and investment. He emphasized that using local currencies for cross-border transactions and linking payment systems will create more business opportunities in the financial and banking sectors.

H.E. Mamo E. Mihretu, Governor of the NBE, highlighted that the UAE is one of Ethiopia’s largest trading partners and a significant source of foreign investment. He noted that the currency swap arrangement offers an important funding opportunity for Ethiopia and diversifies its currency options to facilitate the increasing volume of trade and investment. The agreements underscore the commitment of both countries to deepen their bilateral partnership and promote sustainable development.

Source : www.centralbank.ae