CBUAE, AMF sign deal to include UAE Dirham in ‘Buna’ platform

The Central Bank of the UAE (CBUAE), has signed an agreement with the Arab Monetary Fund, AMF, to include the UAE Dirham as a settlement currency in the Arab Regional payments clearing and settlement system called “Buna”.

“Buna” is a multicurrency platform that provides clearing and settlement services of cross-border payments in eligible Arab and foreign currencies across the Arab region and beyond, with links to major trade partners.

This project is overseen by a committee chaired by CBUAE Governor and with the membership of the Governors of certain Arab central banks.

CBUAE has confirmed that the UAE Dirham will be the first settlement currency made available in “Buna” platform for the effective use of financial institutions who met participation eligibility criteria.

In this regard, the CBUAE has commended the efforts extended by AMF in developing the “Buna” system, particularly in terms of enhancing the level of compliance of Buna’s operations with the relevant international principles and standards, while emphasising on the importance of Arab central banks collaboration to achieve the strategic objectives of this cross-border payment platform.

The Ministry of Finance (MoF), announced recently the completion of phase one of the transformation of the e-Dirham system, in cooperation with relevant ministries and national banks across the UAE.

The move reiterates MoF’s efforts to bolster e-Dirham in accordance with the highest international standards for Fintech and digital payments for government services fees. The e-Dirham system provides multiple banking services to issue bank cards and digital payment and acquisition solutions for clearing and financial settlements.

The first phase of the transformation of the e-Dirham system included the Ministry of Economy, the Ministry of Energy and Industry, and several national banks. Expansion is underway to include additional federal government entities and national banks.

Separately, financial transfers conducted through the Immediate Payment Instruction (IPI), reached Dhs4.7 billion since the system was introduced by the Central Bank of the UAE, CBUAE, in June 2019.

CBUAE statistics revealed that 1.9 million easiest and fastest transfer transactions were made from June 2019 to June 2020. The CBUAE has introduced the IPI to enable customers make an immediate payment or transfer to another bank account in the UAE in real time, 24/7, 365 days a year and without any cut-offs. With IPI, customers can initiate domestic fund transfers within UAE in in one minute for any amount within the limit of Dhs10,000.

The UAE banking system concluded the year 2019 in a resilient position with adequate capital and liquidity buffers well above regulatory requirements.

The banking system remained profitable due to the effectiveness and improved cost efficiency benefitting from efficiency gains related to recent mergers in the sector, according to a  recent UAE Central Bank report.

The Central Bank of the UAE (CBUAE), has published its Financial Stability Report (FSR), which provides information, analysis and an assessment of the resilience and matters that require additional support in the banking and financial system in the UAE promoting public understanding and transparency.

The report covers macro-financial conditions, regulatory developments, assessments of the banking and finance sector, as well as assessments of payment systems, capital markets and the insurance sector.

The report covers macro-financial conditions, regulatory developments, assessments of the banking and finance sector, as well as assessments of payment systems, capital markets and the insurance sector. During the first quarter of 2020, the outbreak of the COVID-19 pandemic changed the outlook for global and domestic economic activity, posing challenges to the operating environment of the banking sector. “However, our stress tests demonstrate that the UAE banking sector is able to withstand macro-financial shocks of any size,” the bank said in a statement. The government of the UAE and CBUAE have taken a wide range of measures to mitigate the adverse impact of COVID-19 pandemic and launched substantial financial programmes to help affected individuals and corporates and the economy at large. In addition, the temporary measures introduced by the CBUAE included the IFRS 9 (International Financial Reporting Standard), guidance and prudential filters that were designed to ensure financial and prudential reporting of financial institutions adequately, reflect the COVID-19 operating environment.

Agencies