Abu dhabi: The Central Bank of the United Arab Emirates (CBUAE) and the Central Bank of the Republic of Trkiye (CBRT) have signed a bilateral currency swap agreement involving the UAE Dirham (AED) and the Turkish Lira (TRY). In addition, two memorandums of understanding (MoUs) were signed, focusing on promoting the use of local currencies for cross-border transactions and interlinking their payment and messaging systems.
According to Emirates News Agency, these agreements aim to enhance financial and economic collaboration and strengthen bilateral trade. The agreements were signed by Khaled Mohamed Balama, Governor of CBUAE, and Ph.D. Fatih Karahan, Governor of CBRT, with assistant governors and senior officials from both parties present.
The currency swap agreement has a nominal size of AED18 billion and TRY198 billion. It is designed to bolster bilateral trade and further financial cooperation by providing local currency liquidity to financial markets, which will enable more effective settlement of cross-border financial and commercial transactions.
The first MoU sets a framework for using the UAE Dirham and the Turkish Lira in settling cross-border transactions. It aims to develop the foreign exchange market, facilitate trade and foreign remittances, boost investment, and accelerate economic growth and financial stability in both nations. This includes establishing a local currency settlement scope to broaden the use of both currencies and deepen the exchange of information and experience.
The second MoU focuses on facilitating cross-border payment transactions and supporting the use of domestic payment cards, aligning with regulatory and supervisory requirements. It also promotes the exchange of expertise in developing central bank digital currency (CBDC) platforms. The memorandum outlines the integration of the UAE’s instant payment platform (Aani) with Turkey’s FAST system to enhance transaction efficiency.
Khaled Mohamed Balama expressed that the agreements reflect the commitment of both central banks to elevate their strategic partnership, especially in finance, financial technology, and cross-border digital payments. The use of local currencies in transactions reduces costs and settlement time, thereby boosting trade volumes and financial remittances.
Fatih Karahan highlighted that these agreements signify a shared commitment to advancing financial cooperation and fostering bilateral trade using local currencies. The agreements open new opportunities for trade and investment relations between stakeholders in both countries, with a focus on exchanging expertise in payments and financial technology to serve the economic interests of both nations.
