In a significant move aimed at fortifying economic ties, the Central Bank of the UAE (CBUAE) and the People’s Bank of China have renewed their currency swap agreement. The agreement is worth 18 billion dirhams (35 billion Chinese yuan), for a period of five years.
CBUAE highlighted that the currency swap agreement aims to develop financial and commercial cooperation between the two countries. This is by facilitating the provision of liquidity in local currency to financial markets. The agreement also settles cross-border financial and commercial transactions in a more effective and efficient manner.
The agreement that was signed in Hong Kong is keen to strengthen the strategic partnership between both countries. It aims to expand the horizons of bilateral relations between the UAE and China in the financial and economic fields.
Moreover, the UAE and China signed a memorandum of understanding (MoU) to enhance cooperation in the field of developing digital currencies for central banks.
Developing a digital currency for central banks
The MoU aims to develop a digital currency for central banks and enhance cooperation between the CBUAE and the Digital Currency Institute of the People’s Bank of China in the field of financial technology.
It allows both the UAE and China to exchange information on best practices and regulations related to digital currencies. Moreover, it supports the implementation of joint initiatives and projects between the two parties. Among these projects is the “mBridge” project which is a platform that allows the use of multiple digital currencies for central banks. It aims to facilitate cross-border commercial payments and make them immediate and more secure.
Exchange of visits between both countries
The MoU also includes cooperation in the field of training and developing the technical skills of specialists on both sides. Moreover, it outlines the exchange of bilateral visits to discuss issues of common interest of the UAE and China.
Commenting on the signing, H.E Khaled Mohamed Balama, Governor of CBUAE, stated: “The renewal of the currency swap agreement between our two countries and the memorandum of understanding with our partners in China reflect the depth of the relationship between the UAE and China, embodying the Central Bank’s commitment to solidifying the partnership with our Chinese counterpart in financial, trade and investment fields. We look forward to strengthening cooperation with our partners on innovation and solutions in financial technology including central bank digital currency to support the growth of our economy and society.”
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