The Central Bank of the UAE (CBUAE) and the People’s Bank of China recently inked a significant agreement to renew the currency swap between the two countries.
They also signed a memorandum of understanding (MoU) aimed at advancing technical and technological collaboration for the development of central bank digital currencies (CBDCs). The signing, which took place in Hong Kong, marked a strategic move to strengthen bilateral relations in the financial and economic sectors.
This renewed currency swap, valued at 18 billion dirhams (approximately 35 billion Chinese yuan) for the next five years aims to foster financial and trade collaboration between the UAE and China.
The agreement facilitates liquidity provisions in local currencies for cross-border financial and trade transactions, enhancing efficiency in settlements.
Furthermore, the MoU focuses on bolstering cooperation in central bank digital currency development and fostering collaboration between CBUAE and the Digital Currency Institute of the People’s Bank of China in the realm of financial technology.
It sets the stage for the exchange of information on digital currency best practices, supports joint initiatives, and outlines projects like the “mBridge,” a multi-central bank digital currencies platform aimed at facilitating secure and instant cross-border trade payments. The collaboration extends to training specialists, bilateral visits, and discussions on shared interests.
Governor Khaled Mohamed Balama of CBUAE highlighted the significance of these agreements, underscoring the deep relationship between the UAE and China. He emphasized the commitment to strengthening partnerships in financial innovation, particularly in the development of central bank digital currencies, as a means to bolster the growth of their respective economies and societies.