Asian Clearing Union (ACU) is an initiative that allows its members to settle intra-regional payments seamlessly. It was established in 1974 and started functioning in November 1975. Currently, the Asian Clearing Union members include nine countries from the Asia-Pacific region.
ACU is an initiative of ESCAP or the United Nations Economic and Social Commission for Asia and the Pacific. In this article, we have shared further information about the Asian Clearing Union, its history, members, and significance.
What is the Asian Clearing Union?
Asian Clearing Union is a socio-economic organization facilitating seamless and convenient clearing systems in payments between the member states. The member countries settle payments on a net multilateral basis through the Asian Clearing Union.
Established by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), ACU ACU also encourages multilateral cooperation between Union members to reduce payments.
Asian Clearing Union
ESCAP (United Nations Economic and Social Commission for Asia and the Pacific)
To provide a platform to settle intra-regional payments on a multilateral basis
Asian Clearing Union Members
Currently, there are nine members of the Asian Clearing Union. By default, all monetary authorities, such as the central banks of the member countries, are also a part of the ACU. The Asian Clearing Union is an association of the following nine members:
- Maldives (Maldives Monetary Authority)
- Bangladesh (Bangladesh Bank)
- India (Reserve Bank of India)
- Nepal (Nepal Rastra Bank)
- Myanmar (Central Bank of Myanmar)
- Iran (Central Bank of Islamic Republic of Iran)
- Pakistan (State Bank of Pakistan)
- Bhutan (Royal Monetary Authority of Bhutan)
- Sri Lanka (Central Bank of Sri Lanka)
ACU Member States: Year of Joining
When the Asian Clearing Union was established in 1974, there were only six member countries. Find out the year in which member states joined the Asian Clearing Union below.
Asian Clearing Union Members
Asian Clearing Union Objectives
The primary goal of the Asian Clearing Union is to foster cooperation between different member countries to streamline payment services. Besides this, ACU has the following objectives
- To settle international transactions multilaterally
- To facilitate the use of different currencies of the participating states
- To improve trade and banking relations between member states
- To foster better cooperation among member states on a monetary basis
- To provide currency exchange methods among member states
Asian Clearing Union Eligibility Criteria
Becoming a part of the Asian Clearing Union requires the fulfilment of certain eligibility criteria. The following are the eligibility criteria for participating in the Union:
- Any monetary authority or central bank of a regional member can be a participating member of the Asian Clearing Union.
- Any ESCAP associate member or monetary authority of any non-ESCAP country can also apply to become a member of the ACU.
- A member state of the Asian Clearing Union is not permitted to participate in any other clearing group or arrangement.
Asian Clearing Union: Eligible Transactions
The Asian Clearing Union was established to facilitate seamless monetary transactions between the member states. 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 of the Asian Clearing Union.
- 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 the Asian Clearing Union 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.
Asian Clearing Union: Ineligible Transactions
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. The following payments and transfers cannot be settled through the Asian Clearing Union:
- Any payments between India, Nepal, and Bhutan are not permitted through the ACU.
- 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 Asian Clearing Union member states is not permitted.
- However, if the RBI and other participants have an existing agreement, they can transact up to that extent.
FAQs on Asian Clearing Union
Q1. What is the Asian Clearing Union?
Asian Clearing Union or ACU is a socio-economic organization facilitating seamless and convenient clearing systems in payments made between the various member states. Asian Clearing Union was established in 1974 and currently has nine member countries.
Q2. When was the Asian Clearing Union established?
Asian Clearing Union was established in 1974 with its headquarters in Tehran, Iran. It came into effect in November 1975. Since then, the Asian Clearing Union has facilitated several intra-regional transactions between the member countries on a multilateral basis.
Q3. What is the purpose of the Asian Clearing Union?
The purpose of the Asian Clearing Union is to foster cooperation between member countries to streamline payment services. Asian Clearing Union also facilitates the use of different currencies of the participating states and improves trade relations between member states.
Q4. Who are the members of the Asian Clearing Union?
Currently, there are nine members in the Asian Clearing Union, including Bangladesh, India, Bhutan, Iran, Myanmar, Maldives, Nepal, Pakistan and Sri Lanka. The central banks of all these countries are also members of the Asian Clearing Union by default.
Q5. Is India a member of the Asian Clearing Union?
Yes, India is a member of the Asian Clearing Union. The Reserve Bank of India, India’s central bank, is also a part of ACU. The Asian Clearing Union facilitates trade and seamless payments between its members and promotes cooperation in trade and banking.
Q6. Where is the headquarters of the Asian Clearing Union located?
Asian Clearing Union headquarters are located in Tehran, Iran. The Asian Clearing Union was established on 9 December 1974 to facilitate convenient payment clearing between the member states of ACU. The union currently has nine member countries.