Rupee, yuan to join UAE payment system Buna

It aims to improve cross-border currency transactions, deepen international cooperation

BEIJING:

United Arab Emirates-based cross-border payment system Buna, is set to expand to include currencies from Pakistan, China, India, and several African and European countries by 2024-25.

The system is already connected to 108 live banks across 14 countries, with an additional 105-plus banks set to on board the platform. Currently, six currencies including four from the Arab region, namely UAE dirham, Saudi riyal, Egyptian pound, and Jordanian dinar, as well as the US dollar and European single currency euro, are part of the platform, processing real-time funds transfer cost-effectively.

“The inclusion of rupee in the payment system will improve the efficiency of cross-border currency transactions in Pakistani banks and help deepen Pakistan’s international economic, trade and investment cooperation,” Ren Haiping, Deputy Head of Department of Strategic Research, China Centre for International Economic Exchanges (CCIEE), told China Economic Net.

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“The vital significance of financial infrastructure in curbing systemic financial risks and improving financial market stability is self-evident, thus Buna could help improve Pakistan’s financial market infrastructure and promote local development of cross-border currency business,” noted Haiping. “In addition, this will help attract more foreign companies to make full use of Buna to deepen cooperation with Pakistan to promote the improvement of Pakistan’s economic situation,” he said.

Last year, Pakistan used RMB to pay for crude oil from Russia for the first time, which could be described as a profound impact on Pakistan’s economic development and the global economic pattern. RMB settlement has not only simplified the transaction process, but also reduced transaction costs.

“Currently, the dominance of the US dollar in international trade and finance is being questioned increasingly, and many countries have begun to seek diversified currency settlement and reserve methods to reduce dependence on a single currency. Against this background, Pakistan’s decision has a significant demonstration effect,” said the CCIEE deputy head.

“Joining Buna this time means another successful exploration of Pakistan in the financial field and indispensable step towards de-dollarisation,” he said.

Published in The Express Tribune, February 27^th, 2024.

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