RIZWAN BHATTI
KARACHI: The State Bank of Pakistan (SBP) has temporarily suspended the operations of “ACU Euro” under the Asian Clearing Union (ACU) mechanism with immediate effect.
Sources said that during December 2008, SBP decided to include ACU Euro as the second ACU currency along with US dollar, accordingly, banks were allowed to conduct ACU Euro transactions with effect from 1st January, 2009. Banks were asked that transactions under ACU Mechanism, in addition to ACU Dollar (ACUD), may also be denominated and settled in ACU Euro (ACUE).
At the time of permission, authorized dealers were also required to establish ACUE accounts with their correspondents in ACU the member countries and open their correspondents’ ACUE accounts with them.
However, after 7-year, SBP on Thursday announced that it has suspended operations of ACU Euro for time being and directed authorized dealers to settle the ACU Euro other side of the ACU mechanism.
“As the payment channel for processing “ACU Euro” transactions is under review, SBP is temporarily suspending operations in ‘ACU Euro’ with immediate effect,” said EPD Circular Letter No. 10 of 2016 issued on July 28, 2016.
Accordingly, all eligible transactions in Euro are permitted to be settled outside the ACU mechanism until further notice, it added.
SBP has also made it clear that instructions related to settlement of ACU Dollar transactions and other instructions on the subject will remain unchanged.
It may be mentioned here that the transactions in ACUE were linked with reporting to SBP and settled by SBP separately i.e. independent of ACUD transactions. In other words, two separate accounting and settlement systems was required to be maintained; one for transactions conducted in ACU Dollar (ACUD) and the other one for the ACU Euro (ACUE).
Further, with a view to encouraging banks to maintain reasonable/sufficient balances in their accounts to ensure timely payments, the authorized dealers were permitted to pay/receive interest, at their discretion, on ACUD and ACUE accounts as per mutually agreed terms and conditions. While, the balances of ACUD & ACUE accounts together with other FCY/Nostro accounts was linked to the overall exposure limits of banks.
