BB allows Euro for settling payments in ACU from Jan

FE Team | Published: December 24, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
The Bangladesh Bank (BB) has allowed settlement of import payments in Euro alongside the US dollar among the Asian Clearing Union (ACU) member countries.
The new payment system will come into effect from January 1 next year in line with the eight-member ACU board of directors' decision, officials said Tuesday.
Central bank chiefs of the ACU member countries took the decision at its 37th board of directors meeting aiming to make the payment system easier. The meeting was held in Nay Pyi Taw, administrative capital of Myanmar, on June 17-18 this year.
"The central banks of Bangladesh, India, Nepal, Pakistan, Sri Lanka, Myanmar and Bhutan signed an agreement to settle current transactions among these countries through ACU mechanism," the BB said in a circular, issued Tuesday.
Under the new payment system, a foreign exchange dealer bank needing to fund its Asian Monetary Unit (AMU) NOSTRO account with the corresponding bank in an ACU member country shall do so through the BB against surrender of the required amount in AMU or in equivalent taka at BB's selling rate.
"The BB will advise the central bank of the concerned ACU member country to make the amount available to the transferee bank in that country," the circular added.
After making the payment, the central bank of the recipient ACU member country shall advise the secretary general of the ACU secretary to credit its account by debiting from BB's account, according to the circular, which was sent to all commercial banks on the same day.
"We've asked the commercial banks to follow the new payment settlement system allowing Euro alongside the US dollar among the ACU member countries from January 1, 2009," a BB senior official told the FE.
He also said the foreign exchange risk exposure may increase because of fluctuation of the exchange rate of Euro in the global market.
The Euro-US dollar conversion rate will be fixed in line with the International Monetary Fund's (IMF) value of special drawing right (SDR), according to the official.
A technical committee was earlier formed under the leadership of the Central Bank of Sri Lanka to examine the use of a second currency in ACU transactions in line with the decision of the 36th board meeting, held in Dhaka on May 15, 2007.
The governors of the Central Bank of Myanmar and the Central Bank of Sri Lanka are now functioning as chairman and vice-chairman of the Tehran-based union respectively.
The ACU started its operations in November 1975 to help boost trade relations among its member countries. Bangladesh and Myanmar joined the forum as the sixth and the seventh members in 1976 and 1977 respectively. However, Bhutan joined the ACU December 9, 1999.
The main objective of the clearing union is to promote trade among the member countries by making the transaction easier, economising the use of foreign exchange reserves and minimising transfer costs.