CBUAE and NBE sign currency swap agreement, two MoUs
- 16 Jul 2024
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 and Ethiopian Birr.
The two parties also entered into two Memoranda of Understanding (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 Dhs3 billion and ETB 46 billion. This 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 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 in accordance with the regulatory requirements of each country, in addition to the cooperation in the field of financial technology and central bank digital currencies.
Khaled Mohamed Balama, Governor of the CBUAE, said, “The bilateral currency swap agreement and the MoUs signed today reflect the robust economic cooperation between the UAE and Ethiopia, specifically in the areas of trade and investment. Swapping the currencies of the two countries and utilising local currencies to settle cross-border transactions and enhancing the cooperation in interlinking instant payment systems, electronic switches and messaging systems will enhance economic, trade, and investment prospects. This initiative will also pave the way for more joint business opportunities in the financial and banking sectors. We look forward to working closely with our partners in Ethiopia to enhance financial stability and achieve our mutual interests.”
Mamo E. Mihretu, Governor of the NBE, stated, “UAE is one of Ethiopia’s largest trading partners as well as a significant source of foreign investment and development finance. The currency swap arrangement provides an important funding opportunity for Ethiopia and helps diversify the range of currencies at its disposal to facilitate the growing volume of trade and investment transactions expected over the coming years. Both the bilateral currency swap agreement and the MOUs signed today are a testament to the shared commitment of the two countries to further deepen our already close bilateral partnership, so as to facilitate sustainable development and a prosperous future.”
Abu Dhabi banks: Gross domestic credit extended by banks operating in Abu Dhabi in the first four months of the year grew by 5 per cent or Dhs45.8 billion to Dhs961.9 billion from Dhs915.9 billion at the end of last year, according to UAE banking indicators by emirate released by the Central Bank of the UAE (CBUAE).
Credit facilities provided by banks operating in Dubai increased by 2.8 per cent or Dhs25.2 billion to Dhs929.8 billion at the end of April 2024 from Dhs904.6 billion at the end of December 2023.
Domestic credit provided by banks operating in Abu Dhabi and Dubai rose in the first four months of the year by 4.6 per cent and 1.9 per cent to Dhs801.4 billion and Dhs822.6 billion respectively.
Islamic Banks: Gross credit provided by Islamic Banks increased by 1.1 per cent in the first four months of 2024 to Dhs433.7 billion, constituting more than 21 percent of aggregate bank loans and financial facilities, according to banking indicators by bank type - Conventional Banks (CB) and Islamic Banks (IB) issued by the Central Bank of the UAE (CBUAE) today.
Gross credit extended by CB rose since the beginning of the year to the end of April by 4.3 percent to Dhs1.629 trillion.
Apex bank data showed that investments by IB and CB grew by 9.8 per cent and 3.7 per cent in the period under review to Dhs145.7 billion and Dhs520.5 billion respectively.
Assets of IB operating in the local market amounted to Dhs737.4 billion, representing 17.16 per cent of the total assets of the banking sector, while assets of CB reached Dhs3.559 trillion at the end of April.
In terms of deposits, IB recorded a 7.4 percent growth during the first four months of the current year to reach Dhs532.3 bn at the end of last April, while deposits with CB grew by 7.8 per cent to exceed Dhs2.185 trillion at the end of the same period.
