The Reserve Bank has announced that all eligible current account transactions, including commercial transactions with Sri Lanka, can be settled in any eligible currency outside of the Asian Clearing Union (ACU) mechanism until further notice.
The new system comes into effect with immediate effect. Currently, central banks and monetary authorities of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are members of the ACU.
The Asian Currency Unit (AMU) is the common unit of account of ACU and is referred to as “ACU dollar”, “ACU euro” and “ACU yen”, which are equivalent to one US dollar, one euro and one Japanese yen, respectively . All means of payment under ACU must be denominated in AMU. The settlement of such instruments is done by Tier I banks through the ACU Dollar Accounts, ACU Euro Accounts and ACU Yen Accounts, which should be distinct from the other US Dollar, Euro and Japanese Yen Accounts, each maintained for non-ACU transactions.
Based in Tehran, Iran, ACU was established on December 9, 1974 at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) to promote regional cooperation. Its aim is to facilitate payments between member countries for legitimate transactions on a multilateral basis, thereby saving on the use of foreign exchange reserves and transfer costs, and promoting trade between participating countries.
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