BRICS Update: UAE & China Ink Currency Swap and CBDC Partnership

• UAE and China Forge Currency Swap and Digital Currency Partnership Amid BRICS Economic Alliance Surge
• Renewal of Currency Swap Agreement and CBDC Collaboration
• Details of the Agreement
• A Future Digital Currency for BRICS?
• UAE's Role in BRICS Alliance

UAE and China Forge Currency Swap and Digital Currency Partnership Amid BRICS Economic Alliance Surge

The United Arab Emirates (UAE) and China have recently made headlines as they enter into a currency swap and Central Bank Digital Currency (CBDC) partnership. This development, which sees the renewal of a previously established currency swap agreement, arrives at a time when the BRICS economic alliance is gaining significant global traction. In addition to the currency swap, the nations have also signed a memorandum of understanding (MoU) aimed at fostering CBDC development, signifying the growing importance of digital finance within the alliance's strategy.

Renewal of Currency Swap Agreement and CBDC Collaboration

The BRICS alliance is becoming an influential player on the global stage, with its six-nation expansion plan announced at the 2023 Annual Summit being a major talking point. As key members of this bloc, the UAE and China's recent agreement points towards an increased collaboration between original and recently invited participants. Notably, the Central Bank of the UAE and the People's Bank of China have renewed a currency swap agreement, and simultaneously, both institutions have committed to the development of a Central Bank-issued digital asset through a newly signed MoU.

Details of the Agreement

The agreement was signed off by the governor of the Central Bank of the UAE, Khaled Mohamed Balama, and the governor of the People's Bank of China, Pan Gongsheng. The currency swap holds an estimated worth of 18 billion dirhams, equivalent to 35 billion yuan. The purpose of these agreements is to strengthen relations, foster bilateral cooperation, and support the shared objectives of these nations for the next five years.

A Future Digital Currency for BRICS?

Analysts view this move as an attempt to boost national and bilateral cooperation, predominantly in the economic and digital finance sectors. China's digital Yuan CBDC has been met with considerable success, prompting speculation about the potential for a digital currency becoming a mainstay within the BRICS alliance.

UAE's Role in BRICS Alliance

Although the UAE was invited to join the BRICS alliance in August, their official entry won't commence until 2024. However, the recent agreement with China suggests that the UAE is already developing strategic relationships within the bloc, a move that is expected to facilitate its successful integration into the alliance in the coming months.

Edited by Jonathan Stoker