Turkish, UAE central banks ink swap, cooperation agreements

ISTANBUL

The central banks of Türkiye and the United Arab Emirates signed three agreements, including a swap deal to strengthen financial cooperation and enhance trade and economic ties between the two countries.

The deals include a bilateral currency swap agreement between the Turkish Lira and the UAE’s dirham, alongside two memoranda of understanding: One to promote the use of local currencies for cross-border transactions and another to interlink their payment and messaging systems.

The swap agreement is for 198 billion liras ($4.76 billion) and 18 billion UAE dirhams ($4.9 billion), mutually.

It is designed to enhance bilateral trade and strengthen financial cooperation between the two nations by providing local currency liquidity to financial markets, thereby facilitating more efficient and effective settlement of cross-border financial and commercial transactions, the Turkish Central Bank said.

The first pact seeks to establish a framework for encouraging the use of the UAE’s dirham and Turkish Lira in cross-border transaction settlement. The second agreement seeks to boost the use of domestic payment cards and ease cross-border payment transactions while adhering to the regulatory and supervisory requirements of both countries.

It also promotes the sharing of knowledge in creating platforms for central bank digital currency (CBDC) for both people and organizations.

It also describes how the UAE's instant payment platform (Aani) and Türkiye's FAST system would be integrated to improve the effectiveness of cross-border financial transactions.

This involves connecting switches and electronic systems in both nations to increase interoperability and operational efficiency.