Sri Lanka quits Asian payment mechanism, prompting Bangladesh to halt transactions
Staff Correspondent
Sri Lanka has left the regional payment mechanism Asian Clearing Union or ACU, prompting Bangladesh Bank to halt transactions with the crisis-hit neighbour.
In response to the self-motivated decision by the Central Bank of Sri Lanka to remain temporarily suspended from the ACU mechanism with effect from Oct 14, the Bangladesh Bank in a notice on Thursday asked all banks not to do any trade and trade-related transactions with Sri Lanka through the mechanism.
Formed in 1974 in the initiative of the United Nations Economic and Social Commission for Asia and the Pacific, the Asian Clearing Union is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.
The main objectives of the clearing union are to facilitate payments among member countries for eligible transactions, thereby economising on the use of foreign exchange reserves and transfer costs, as well as promoting trade and banking relations among the participating countries.
Besides Bangladesh and Sri Lanka, Bhutan, India, Iran, Myanmar, Nepal, Pakistan and the Maldives are members of the ACU.
The members pay import bills to other members through the union every two months.
Bangladesh is scheduled to make the next payments through the ACU in the first week of October.
