The Central Bank of the UAE (CBUAE) and Bank Indonesia (BI) have signed a Memorandum of Understanding (MoU) to enhance bilateral cooperation in payment systems.
This agreement was formalized during a visit to the UAE by Indonesian President Joko Widodo.
The MoU, signed by Khaled Mohamed Balama, Governor of the CBUAE, and Perry Warjiyo, Governor of BI, builds on a previous MoU from November 2023, which 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 two countries, promoting faster, more efficient, transparent, and affordable cross-border payments.
The agreement also includes the establishment of a joint risk management mechanism, regulatory cooperation, and the protection of user rights in compliance with each country’s laws.
A key component of the partnership involves creating a cooperation framework for local currency transactions (LCT) and payment systems, starting with Quick Response (QR) payments.
The cross-border QR payment linkage, once implemented, will use direct local currency exchange rate quotations from appointed cross-currency dealer (ACCD) banks.
This approach aims to make cross-border payments between Indonesia and the UAE cheaper, faster, more inclusive, and transparent.
Khaled Mohamed Balama, Governor of the CBUAE, highlighted the importance of this cooperation, stating that it presents a significant opportunity to enhance collaboration with Bank Indonesia across various financial and banking fields, including financial technology, innovation, and digital payments.
He emphasized that this initiative supports the UAE’s objective of becoming a leading global hub for financial technology and digital and cross-border payment solutions.
Perry Warjiyo, Governor of BI, noted that the cooperation in the payment system area will not only bolster efforts to promote the digital economy and finance in both Indonesia and the UAE but also open up new possibilities and opportunities.
He expressed optimism about the potential for conducting cross-border payments under the local currency transaction framework, which is scheduled to be operational in 2024.