One is SWAP: A trilateral agreement between the central banks of Türkiye and the UAE

The Central Bank (CBRT) signed a bilateral currency swap (SWAP) agreement with the Central Bank of the UAE (198 billion lira and 18 billion dirhams).

The two countries also signed two more memorandums of understanding.

One is to encourage the use of local currencies (lira-dirham) in cross-border transactions, and the other is to connect payment and messaging systems.

According to the Central Bank, the SWAP agreement aims to further strengthen financial cooperation between the two countries and promote bilateral trade.

The agreement on cross-border transactions aims to develop foreign exchange markets in both countries, facilitate commercial and foreign payments, increase investments, and accelerate economic growth and financial stability.

The Central Bank's statement summarized it as follows:

• To expand the use of both currencies in all transactions in current and capital accounts by establishing a local currency swap mechanism.
• Facilitating cross-border payment transactions and supporting the use of local payment cards
• To increase the efficiency of cross-border financial transactions through the integration of the FAST system in Türkiye and the instant payment platform (Aani) in the UAE.

Central Bank Governor Fatih Karahan said , “The agreements offer new opportunities to facilitate trade and investment relations between stakeholders in both countries.”

With SWAP, one of the most important tools of financial markets, two parties exchange certain assets or cash.