Newsletters
The central banks of Türkiye (CBRT) and the United Arab Emirates (CBUAE) signed three agreements on Thursday, including a $4.9 billion currency swap deal, to deepen financial cooperation and enhance trade and economic relations between the two countries.
The deals include a bilateral currency swap agreement between the Turkish lira and the UAE dirham, along with 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.
"These agreements aim at promoting financial and economic collaboration and strengthen bilateral trade," the Central Bank of the Republic of Türkiye said in a statement.
The swap agreement is for ₺198 billion ($4.7 billion) and 18 billion UAE dirhams ($4.9 billion), mutually.
The agreement is designed to promote bilateral trade with the aim of further strengthening financial cooperation between the two countries through providing local currency liquidity to financial markets, enabling more effective and efficient settlement of cross-border financial and commercial transactions, according to the Turkish Central Bank.
The agreements were signed by Fatih Karahan, governor of the Central Bank of the Republic of Türkiye, and Khaled Mohamed Balama, governor of the Central Bank of the UAE, in the presence of assistant governors and senior officials from both parties.
The first memorandum of understanding aims to establish a framework for promoting the use of the Turkish lira and UAE dirham in settling cross-border transactions.
Its goals include expanding the foreign currency market, facilitating international commerce and remittances, boosting investment, and accelerating financial stability and economic progress in both countries.
The agreement specifically calls for establishing a local currency settlement scope to increase the usage of both currencies in all current and capital accounts transactions, and strengthening information and experience sharing to accomplish common objectives.
The second memorandum 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 for both people and organizations. Additionally, the memorandum outlines 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.
"These agreements reflect the shared commitment of both parties to advancing financial cooperation and fostering bilateral trade using local currencies, in support of broader economic relations and sustainable development goals," Fatih Karahan, Governor of the Central Bank of the Republic of Türkiye, stated.
"The agreements open up new opportunities to facilitate trade and investment relations between stakeholders in both countries. We look forward to exchanging expertise and experiences in payments and financial technology, and to accelerating the adoption of advanced technologies in the financial sector, including artificial intelligence, in ways that serve the economic and financial interests of both countries," Karahan noted.
Khaled Mohamed Balama, Governor of the Central Bank of the UAE said: "The agreements signed reflect the commitment of the Central Bank of the UAE and the Central Bank of the Republic of Türkiye to work together in supporting the efforts of both nations to further strengthen their strategic partnership to new heights—particularly in the areas of finance, financial technology, and cross-border digital payments."
"The use of local currencies in cross-border financial and commercial transactions contributes to reducing costs and settlement time, while also helping to develop the exchange market for both currencies. This, in turn, boosts trade volumes and financial remittances," Balama concluded.
2 min read
