Central Bank of Myanmar

(I) Introduction

(www.asianclearingunion.org)

The Asian Clearing Union (ACU) was established at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). The Draft Agreement Establishing the ACU, was finalized at a meeting of senior officials of the governments and central banks held at ESCAP, Bangkok, in December 1974 after five central banks (India, Iran, Nepal, Pakistan, and Sri Lanka) signed the Agreement. Bangladesh and Myanmar were the sixth and seventh signatories to this Agreement. Bhutan and Maldives signed the Agreement in 1999 and 2009 respectively . At present, there are nine member countries, consisting of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka.

Asian Clearing Union (ACU) was established in December 1974 and began its operations by the first week of November 1975. The secretariat office is located in Tehran, Iran. Myanmar formally applied for membership in November 1976 and became a member of the ACU on January 13, 1977. Participation in the ACU shall be opened to the Central Bank of Monetary Authority of each regional member or associate member of ESCAP.

The Governor and the Deputy Governor serve as Director and Alternate Director of the Board of Directors of the ACU for the Central Bank of Myanmar, and the Director of Accounts Department serves as the officer-in-charge of the ACU for Myanmar.

The Central Bank of Myanmar has assigned the Myanma Foreign Trade Bank, the Myanma Investment and Myanma Economic Bank for the purpose of payments to be made through the clearing facility.

(II) Purposes

The Asian Clearing Union seeks to achieve four basic objectives for its participating countries. They are: -

• To provide a facility to settle on a multilateral basis, payments for current international transactions among the territories of participants;
• To promote the use of participants' currencies in current transactions between their respective territories and thereby effect economics in the use of the participants' exchange reserves;
• To promote monetary co-operation among the participants and closer relations among the banking systems in their territories and thereby contribute to the expansion of trade and economic activity among the countries of the ESCAP region; and
• To provide for currency swap arrangement among the participants so as to make Asian Monetary Units available to them temporarily.

(III) Operations

The accounts of the ACU are kept in a common unit of account designated as Asian Monetary Units (AMUs). The value of one AMU is, with effect from 1.1.1996, be equivalent in value to one US dollar. The AMU is denominated as ACU Dollar. According to the approval of the 37th ACU BOD Meeting, the AMUs are denominated as ACU dollar and ACU euro which are equivalent in value to one US dollar and one Euro, respectively with effect from January 1, 2009.

(IV) Settlement of Balances

• Settlement shall be made of net positions and accrued interest at the end of each two monthly settlement period.
• The Secretary General notifies each participant of its net position including accrued interest and of the amount it shall pay to, or receive from other participants at the end of each settlement period.
• Each debtor shall make the payments within four working days of the receipt from the Secretary General of the notice of the amount to be paid.
• Settlements with members countries of the ACU are made in ACU dollar or ACU euro through the ACU Mechanism.
• Payment may be made in the currency of the creditor subject to its specific consent.
• Starting from the settlement period at the end of August, 2003, the Central Bank of Myanmar has been making settlement in Euro with ACU member's central banks.

(V) Currency Swap Arrangement

• Any participant in net deficit at the end of a settlement period is eligible to avail of the facility.
• Every eligible participant is entitled to the facility from every other participant up to 20% of the gross payments made by it through the ACU mechanism to other participants during the three previous calendar year.
• The rate of interest chargeable on each drawl is equal to US dollar or euro LIMEAN derived from the respective two months LIBOR declared by the British Bankers' Association, applicable for the concerned value date.
• A participant may draw under the swap arrangement for a period of 2 months at a time.

(VI) Meeting of the Board of Directors

Myanmar hosted (i) the 8th meeting of the Board of Directors of the ACU in Yangon on February 4 ~ 5, 1980 (ii) the 15th meeting of the Board of Directors of the ACU in Yangon on April 21 ~ 22, 1987 (iii) the 24th meeting of the Board of Directors of the ACU in Yangon on August 25 ~ 26, 1994, (iv) the 30th meeting of the Board of Directors of the ACU in Yangon on May 28 ~ 29, 2001, (v) the 37th meeting of the Board of Directors of ACU in Nay Pyi Taw on June 16 ~ 17, 2008.

(VII) Myanmar Trade with ACU member countries

Myanmar exports beans, timber, ply wood, betel nuts, dry ginger, natural rubber latex and other commodities to ACU member countries. Myanmar imports bicycle, parts for tractor, medicine and other commodities form ACU member countries.