ABU DHABI – Khaled Mohamed Balama, Governor of the Central Bank of the United Arab Emirates (CBUAE), and Caroline Abel, Governor of the Central Bank of the Seychelles (CBS), today signed two Memorandums of Understanding (MoUs) in Abu Dhabi to enhance the use of local currencies for cross-border financial and commercial settlements, and to interconnect the payment and messaging systems between the two countries.
The first MoU aims to establish a framework to promote the use of local currencies in bilateral commercial transaction settlements, foreign exchange market development, facilitation of bilateral trade and direct investment, remittance settlement and financial market development.
The MoU contains several elements to facilitate commercial settlements in the UAE dirham and Seychellois rupee in accordance with the laws and regulations of each country.
Under the second MoU, the two parties will strengthen cooperation and achieve mutual benefits by directly linking the services of instant payment platforms, electronic switches and messaging systems in accordance with the regulatory requirements of both countries.
This will include interconnections between the Instant Payment Platform (IPP) that the CBUAE is developing as part of its Financial Infrastructure Transformation Programme and a similar platform in Seychelles, as well as between the system and electronic switches to facilitate cross-acceptance of local cards and transaction processing. In addition, it is also exploring linking messaging systems and possible collaboration between fintechs and central bank digital currencies.
Commenting on the occasion, Barama said the signing of the MoU reflects the Central Bank’s keenness to expand ties with regional and international organisations to strengthen the UAE’s economic and commercial partnerships globally.
“The use of our currencies in cross-border financial and commercial transactions reflects growing trade, investment and financial cooperation, and helps reduce costs and time in settling transactions. This will help develop the foreign exchange market for the UAE dirham and Seychellois rupee, facilitating trade transactions, investments and remittances between the two countries,” he explained.
Meanwhile, Abel said, “The importance of an effective and efficient financial system to facilitate trade for a small and open island nation like Seychelles cannot be overemphasized. In this regard, the recently signed Memorandum of Understanding between the two central banks, in accordance with relevant and applicable laws to safeguard the soundness and integrity of our respective financial systems, can assist in this effort.”
She added that the agreement to develop and gradually implement the necessary framework to facilitate the use of the UAE dirham and Seychellois rupee in cross-border transactions could further boost trade relations between stakeholders in the two jurisdictions.
“The Bank of Seychelles is spearheading efforts to modernize and develop Seychelles’ national payments system in line with the Government’s Digital Economy Plan, and the opportunity to collaborate on the interconnection of our two countries’ payments and messaging systems will facilitate the processing and settlement of cross-border financial transactions between the two countries,” Abel said.