Asian Clearing Union To Introduce Euro Alongside U.S. Dollar To Ease Payment Settlement

June 22, 2008 11:48 a.m. EST

Dhaka, Bangladesh (AHN) - Central bank chiefs of the Asian Clearing Union (ACU) have agreed to introduce the Euro alongside the U.S. dollar for settlement of payments among the member countries beginning January, 2009.

The decision was made at the 37th ACU board of directors meeting held in Nay Pyi Taw, administrative capital of Myanmar, on June 17-18, officials said in Dhaka on Sunday.

'The ACU board has agreed in principle to allow Euro as an alternative currency alongside the U.S. dollar from January, 2009 aiming to make the payment system easier,' Bangladesh Bank (BB), the country's central bank, Governor Salehuddin Ahmed told AHN along with a group of reporters in the capital, Dhaka on the day after returning from Myanmar.

The central bank of Bangladesh chief led a two-member delegation at the board meeting.

The Euro-US dollar conversion rate will be fixed in line with the International Monetary Fund's (IMF) special drawing right (SDR), the BB governor added.

The board meeting also agreed on incentive to be provided by the commercial banks concerned on the balance of ACU dollar accounts to ensure sufficient funds in such accounts, they added.

Central banks of the ACU member countries are the Reserve Bank of India (RBI), the State Bank of Pakistan (SBP), the Central Bank of Islamic Republic of Iran, the Bangladesh Bank, the Central Bank of Sri Lanka, Central Bank of Myanmar, the Royal Monetary Authority of Bhutan and Rastra Bank of Nepal.

The governors of the Central Bank of Sri Lanka and the Royal Monetary Authority of Bhutan have been elected chairman and vice-chairman of the eight-member ACU respectively for the year 2009, the officials confirmed.

The ACU started its operation in November, 1975 to help boost trade relations among its member countries. Bangladesh and Myanmar joined the forum as the sixth and seventh members in 1976 and 1977 respectively. However, Bhutan joined the ACU on Dec. 9, 1999.

The main objective of the clearing union is to promote trade among the member countries by making the transaction easier, economizing the use of foreign exchange reserves and minimizing transfer costs.