The Central Bank of the UAE and Bank Indonesia are accelerating efforts to interconnect their payment systems, utilizing local-currency transactions and digital financial innovations to streamline bilateral trade, according to CBUAE Governor Khaled Mohamed Balama and Indonesian Ambassador Judha Nugraha. The financial integration initiatives build upon prior memoranda of understanding and a framework for settling cross-border transactions in UAE dirhams and Indonesian rupiah.
Cross-Border Payment Systems and Financial Integration
Central bank officials from the United Arab Emirates and Indonesia met in Abu Dhabi to advance financial and banking cooperation. CBUAE Governor Khaled Mohamed Balama received Indonesian Ambassador Judha Nugraha at the central bank’s headquarters alongside assistant governors and senior officials. The discussions focused on establishing practical mechanisms for faster, more transparent, and more accessible cross-border transactions.
According to CBUAE statements, both authorities are exploring the interconnection of their payment systems to provide seamless solutions for businesses and investors. Ambassador Nugraha noted that the 50th anniversary of diplomatic relations between the two nations offers a timely framework to deepen central bank cooperation through local-currency transaction adoption, payment connectivity, and knowledge exchange.
Bilateral Trade Momentum and Prior Agreements
The push for digital financial infrastructure aligns with expanding commercial exchanges between the two countries. CBUAE data shows that non-oil trade doubled between 2017 and 2023, exceeding AED 16 billion. Furthermore, UAE Minister of Foreign Trade Dr. Thani bin Ahmed Al Zeyoudi reported that overall trade with Indonesia increased by 12 percent through 2025.
Did you know? Non-oil trade between the UAE and Indonesia doubled between 2017 and 2023, surpassing AED 16 billion, which catalyzed the need for more efficient local-currency settlement arrangements.
These developments draw on a sequence of formal agreements established between the two central banks:
- December 2023: A memorandum of understanding signed by CBUAE and Bank Indonesia to expand information exchange across monetary policy, financial stability, payment systems, and anti-money laundering regulations.
- May 2024: An agreement establishing a framework to settle eligible cross-border transactions in UAE dirhams (AED) and Indonesian rupiah (IDR), supporting hedging and liquidity-management conditions.
- July 2024: A payment-systems agreement aimed at connecting financial infrastructure for faster, more affordable cross-border payments with joint risk-management protocols.
This financial cooperation operates alongside the UAE-Indonesia Comprehensive Economic Partnership Agreement (CEPA), signed on July 1, 2022, and enacted on September 1, 2023. The CEPA grants Indonesian market access across more than 90 percent of tariff lines.
Wider Digital Currency and Settlement Infrastructure
Beyond bilateral arrangements, the UAE continues to develop wider digital settlement frameworks. CBUAE participates in Project mBridge, a multi-central-bank digital currency platform designed for instant wholesale cross-border payments settled in central bank money.
In January 2024, CBUAE utilized the mBridge platform to execute a AED 50 million Digital Dirham payment to China. This transaction marked the first real-value cross-border CBDC transfer between a Middle Eastern and North African nation and an external jurisdiction on an MVP-ready platform.
Frequently Asked Questions
What is the purpose of the UAE-Indonesia payment connectivity talks?
The discussions aim to interconnect payment systems, facilitate local-currency transactions in dirhams and rupiah, and deploy secure digital solutions to reduce transaction costs and support growing bilateral trade.
When was the UAE-Indonesia CEPA enacted?
The Comprehensive Economic Partnership Agreement was signed on July 1, 2022, and entered into force on September 1, 2023.
How do local-currency transactions benefit importers and exporters?
According to central bank frameworks, settling eligible cross-border transactions in local currencies helps reduce processing expenses, improves liquidity management, and supports financial stability.
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