UAE and Seychelles sign MoUs to promote use of local currencies

Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE), and Caroline Abel, Governor of the Central Bank of Seychelles (CBS), signed on Friday in Abu Dhabi two Memorandums of Understanding (MoU) regarding enhancing the use of local currencies in settling cross-border financial and commercial transactions and interlinking payment and messaging systems between the two countries.

The first MoU aims to establish a framework to promote the use of local currencies in settling bilateral commercial transactions, developing the exchange market, facilitating bilateral trade and direct investment, remittance settlement, and financial market development.

The MoU includes several elements to facilitate the settlement of commercial transactions in the UAE dirham and the Seychellois rupee, in accordance with the laws and legislation of each country.

Under the second MoU, both parties will consolidate cooperation and mutual benefit from the services of instant payment platforms, electronic switches and messaging systems by directly linking them in accordance with the regulatory requirements in the two countries.

This includes interlinking the Instant Payments Platform (IPP), which the CBUAE is developing within the Financial Infrastructure Transformation Programme, and the similar platform in the Seychelles, and between systems and electronic switches to facilitate mutual acceptance of local cards and processing their transactions.

Additionally, exploring the possibility of linking messaging systems and cooperation in FinTech and Central Bank Digital Currencies.

Commenting on the occasion, Balama said that the MoU signing reflects the Central Bank’s keenness to expand its relations with regional and international counterparts to enhance UAE’s economic and commercial partnerships globally.

“The use of the two countries’ currencies for cross-border financial and commercial transactions reflects the growing trade, investment, and financial cooperation and contributes to reducing costs and saving time in settling transactions.”

“This helps in developing the foreign exchange market in the UAE dirham and the Seychellois rupee, leading to enhancing trade exchanges, investments, and remittance between the two countries,” he explained. Abel, in turn, stated, “For small open island economies like Seychelles, the importance of an effective and efficient financial system to facilitate trade cannot be overemphasised.

In this regard, the MoUs just signed between our two central banks, guided by the relevant and applicable laws to safeguard the soundness and integrity of our respective financial systems, can assist this endeavour.”

She added that the agreement to develop and gradually implement the necessary framework to promote the use of the UAE Dirhams and the Seychelles Rupees in cross-border transactions can further facilitate trade relations between stakeholders across the two jurisdictions.