The 51st meeting of the Asian Clearing Union (ACU) board of directors was held Wednesday in Tehran presided by the Iran’s first vice president, Mohammad Mokhber, and central bank governors of member states.
Participants included Elvira Nabiullina, governor of the Bank of Russia, Sergei Kalichits, deputy governor of the Central Bank of Belarus, and representatives from the Central Bank of Afghanistan and the Islamic Development Bank.
Jameel Ahmad, the governor of the State Bank of Pakistan, handed over the presidency of the union to Mohammad Reza Farzin, governor of the Central Bank of Iran and expressed optimism about future of the union.
Farzin elaborated on the Union's future plans and noted the important role of the Union in the global economy.
"Accepting new members with the aim of synergy, gaining new ideas and insight and creating added value for the Union are factors that have to be considered to strengthen the Union. Diversifying the Union's currency basket by using the national currencies of member states and other non-convertible currencies can help promote de-dollarization in trade, further preserve and promote the foreign currency reserves of members and help create an effective framework for settling commercial payments".
The proposed amendments to the charter, which have been reviewed and approved by the technical committees, will significantly contribute to empowering the Union, he added.
The ACU was established in December 1974 at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). Its member countries include Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka and Iran.
At the outset the group strived to boost regional harmony and cooperation in monetary transactions among members and create an efficient system for payments in and among member countries and on multilateral levels.
Farzin noted that effective measures were taken last year to enhance the performance of the Union. "The steps include presenting important proposals for amending the Union charter and talks with 20 plus countries wanting to join the Union."
Diversifying Currency Basket
The completion of the ACUMER, ICU's interbank messaging system, which is now set to become operational, practical measures to diversify the Union's currency basket, the prospect of trade among members using digital currencies of central banks of member countries, establishment of subcommittees, interconnecting payment systems among members, and training programs to share experience and knowledge are key measures of the Union's secretariat, according to Farzin. He expressed the hope for creating the infrastructure to enhance the Union's international rapport.
Mokhber said, "The Asian Clearing Union, by utilizing the clearing mechanism, which emphasizes use of local currencies for settlements among members, has been working to facilitate trade among members and boost the effectiveness and efficiency of the mechanism."
"We believe that the Union has high potential to enhance trade relations and members, including Iran, can and should benefit from this platform for the development of trade and banking relations."
He took stock of the role of US dollar in the global economy and the increasing calls for de-dollarization in several countries big and small. "As such, de-dollarization extends way beyond curbing use of the dollar. It encompasses reducing dependence on dollar-based systems and infrastructure.”
The ACU, with its clearing mechanism that reduces the need for currencies like the dollar and the euro, has been moving towards improving trade ties among members and promoting monetary collaboration for nearly five decades, Mokhber recalled.
Global Challenges
"We strongly believe that the ACU can play an effective role in improving regional harmony under the current circumstances and challenges facing the international monetary and banking systems.”
Russia’s central bank boss Nabiullina praised her country's resilience in the face of western sanctions. Despite the imposition of tough economic sanctions, Nabiullina stressed that Moscow had weathered the storm contrary to the expectations of many observers.
Regarding the economic conditions in Russia, Nabiullina emphasized that businesses in the country have adapted to the changing landscape and there is an improvement in consumer demand.
"Despite the challenges and limitations faced by the Russian economy, it has managed to adjust with the prevailing conditions as various economic sectors remain stable and dynamic."
However, she acknowledged that challenges persist due to the wide-range of western restrictions.
Regarding Russia's international, Nabiullina recalled that although some governments had had severed economic and trade ties with Moscow, her government enhanced banking links with other nations.
