UAE signs AED 3b currency swap agreement with Ethiopia

The Central Bank of the UAE (CBUAE) and National Bank of Ethiopia (NBE) have signed an agreement to enhance financial and commercial co-operation between the two nations, in a deal worth AED 3 billion.

The agreement was signed by His Excellency Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE), and His Excellency Mamo E. Mihretu, Governor of the National Bank of Ethiopia (NBE).

Both parties also entered into two Memorandum 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 AED 3 billion and ETB 46 billion, supporting 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.

The #CentralBankUAE and the National Bank of Ethiopia signed a currency swap agreement and MoUs to promote the use of domestic currencies and interlink their payment and messaging systems.

For more information: https://t.co/13yNLoiVPc pic.twitter.com/UYaBW4F9Na

— Central Bank of the UAE (@centralbankuae) July 16, 2024

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.

His Excellency 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 CBUAE Classification: Public banking sectors.”

His Excellency Mamo E. Mihretu, Governor of the NBE, said: “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."