Asian Clearing Union - Member States, Objective, Eligibility

By : Neha Dhyani

Updated : Mar 11, 2022, 6:11

The Asian Clearing Union or ACU is a socio-economic organisation facilitating seamless and convenient clearing systems in payments between the various member states. ACU was established in 1974, and its headquarters are located in Tehran, Iran. The ACU started functioning in November 1975. The Asian Clearing Union is an initiative of ESCAP or the United Nations Economic and Social Commission for Asia and Pacific.

The primary goal of the Asian Clearing Union is to foster cooperation between different member countries to streamline payment services. Besides this, the ACU also encourages multilateral cooperation between the Union members to reduce payments.

Which are the Member States of the Asian Clearing Union?

The Asian Clearing Union is an association of the following member states:

  • Bangladesh (Bangladesh Bank)
  • Bhutan (Royal Monetary Authority of Bhutan)
  • India (Reserve Bank of India)
  • Iran (Central bank of Islamic Republic of Iran)
  • Maldives (Maldives Monetary Authority)
  • Myanmar (Central Bank of Myanmar)
  • Nepal (Nepal Rastra Bank)
  • Pakistan (State Bank of Pakistan)
  • Sri Lanka (Central Bank of Sri Lanka)

By default, all monetary authorities, such as the central banks of the member states, are a part of the ACU.

What is the Main Objective of the Asian Clearing Union?

The primary objectives of the ACU are the following:

  • To settle international transactions multilaterally
  • To facilitate the use of different currencies of the participating states
  • To foster better cooperation among member states on a monetary basis
  • To provide currency exchange methods among member states
  • To improve trade and banking relations between member states

What are the Eligibility Criteria to Participate in the Asian Clearing Union?

The following are the eligibility criteria for participating in the Asian Clearing Union:

  1. Any monetary authority or central bank of a regional member can be a participating member of the ACU. Also, any ESCAP associate member or monetary authority of any non-ESCAP country can also apply to become a member of the ACU.
  2. A member state of ACU is not permitted to participate in any other clearing group or arrangement.

Which Payments and Transfers are Permitted Through the Asian Clearing Union?

The Asian Clearing Union permits the following payment types for clearing:

  • From a resident living in one member state to a resident living in another member state
  • Any payments related to goods, import and export, and also any payment mutually accepted by the participating members
  • Any payment authorised and permitted by the payer's resident country
  • Any payment denominated in Asian Monetary Units (AMUs) like ACU Euro, ACU Dollar, ACU Yen, etc., can be used to make payments
  • Any payment made between member states for import-export transactions on deferred payment terms
  • Since July 2016, current account transactions in the 'Euro' denomination can be settled outside the Asian Clearing Union mechanism

Which Payments and Transfers are not Permitted Through the Asian Clearing Union?

The following payments and transfers cannot be settled through the ACU:

  • Any payments between India, Nepal, and Bhutan. Unless an Indian resident purchases goods from a Nepal-resident importer permitted by the Nepal Rastra Bank to execute transactions in foreign exchange.
  • Any other transaction besides export-import transactions among ACU member states. However, if the RBI and other participants have an existing agreement, they can transact up to that extent.

The Asian Clearing Union has so far successfully facilitated and streamlined all eligible transactions between member states. It has also played a key role in promoting trade and banking relations among the member states.

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FAQs on Asian Clearing Union

Q.1) What is the Asian Clearing Union?

The Asian Clearing Union or ACU is a socio-economic organisation facilitating seamless and convenient clearing systems in payments made between the various member states.

Q.2) When was the Asian Clearing Union established?

Asian Clearing Union was established in 1974, and its headquarters are located in Tehran, Iran.

Q.3) What is the need for the Asian Clearing Union?

The primary goal of the Asian Clearing Union is to foster cooperation between different member countries to streamline payment services.

Q.4) Who are the participants of the Asian Clearing Union?

The Bangladesh Bank, Royal Monetary Authority of Bhutan, Reserve Bank of India, Central Bank of the Islamic Republic of Iran, Maldives Monetary Authority, Central Bank of Myanmar, Nepal Rastra Bank, State Bank of Pakistan, and Central Bank of Sri Lanka are members of the Asian Clearing Union.