The Central Bank of the UAE (CBUAE) and Bank Indonesia (BI) signed a Memorandum of Understanding (MoU) to bolster bilateral cooperation in payment systems, marking a significant step in enhancing financial ties between the two nations.
The agreement was signed during Indonesian President Joko Widodo’s visit to the UAE.
CBUAE Governor Khaled Mohamed Balama and BI Governor Perry Warjiyo formalized the MoU, building on a previous agreement from November 2023.
The earlier MoU had facilitated cooperation in payment systems and digital innovation and supported the use of local currencies in bilateral transactions.
The latest MoU aims to link the payment systems of the UAE and Indonesia, promoting faster, more efficient, transparent, and affordable cross-border payments.
It will establish a joint risk management mechanism, enhance regulatory cooperation, and protect user rights in compliance with each country’s laws.
The partnership’s next phase involves creating a cooperation framework for local currency transactions (LCT) and payment systems, beginning with Quick Response (QR) payments.
Once implemented, the cross-border QR payment linkage will use direct local currency exchange rate quotations from appointed cross-currency dealer (ACCD) banks.
This initiative aims to make cross-border payments between Indonesia and the UAE cheaper, faster, more inclusive, and transparent.
Balama emphasized the importance of this collaboration, highlighting the opportunity to enhance cooperation with Bank Indonesia across various financial sectors, including financial technology, innovation, and digital payments.
He noted that this effort aligns with the UAE’s objective of becoming a leading global hub for financial technology and cross-border payment solutions.
Warjiyo echoed these sentiments, stating that the cooperation in payment systems will not only advance the digital economy and finance in both Indonesia and the UAE but also unlock new opportunities.
He expressed optimism about the potential for cross-border payments under the local currency transaction framework, scheduled to become operational in 2024.
This strategic alliance between CBUAE and BI aims to enhance the efficiency and inclusivity of cross-border payment systems, benefiting the economies and financial sectors of both countries.
Business News Asia
