In its statement, the National Bank of Ethiopia (NBE) disclosed that Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE), and Mamo E. Mihretu, Governor of the National Bank of Ethiopia (NBE), have signed a bilateral currency swap agreement for the UAE dirham (AED) and birr. The two parties also entered into two MoU to establish a framework for the use of local currencies in settling cross-border transactions and for linking their payment and messaging systems.
The agreement allows the CBUAE and the NBE to swap local currencies with a nominal value of up to AED 3 billion and 46 billion birr.
According to the statement, the deal supports the financial and commercial cooperation between the UAE and Ethiopia through the provision of liquidity in local currencies to financial markets, enabling more effective and efficient settlement of cross-border transactions.
Under the first MoU, the CBUAE and the NBE will consolidate efforts to promote the use of their respective currencies in settling transactions between the UAE and Ethiopia.
The MoU covers several measures that will aim to facilitate the use of the two countries’ local currencies in the settlement of commercial transactions, “It also encourages financial and banking cooperation through knowledge-sharing, ultimately supporting the development of their respective financial markets whilst facilitating bilateral trade and bolstering direct investment.”
Both parties will cooperate under the second MoU in the areas of payment platform services and electronic switches, by interlinking their instant payment systems, national card switches UAESWITCH and ETHSWITCH, and messaging systems per the regulatory requirements of each country, in addition to the cooperation in the field of financial technology and central bank digital currencies.
Source: Capital Ethiopia
