ACU Full Form | Full Form of ACU | What is ACU Full Form
ACU Full Form - Asian Currency Union
Asian Currency Union
- ACU stands for Asian Currency Union. It's a payment arrangement that permits participants settle payments for intra-regional transactions among the participating banks on a net multilateral basis.
- The most objective of this clearing union is to facilitate payments for eligible transactions among member countries so as to economize on the use of foreign exchange reserves and transfer costs and promote the trade and baking relations among the participating countries.
- The decision to determine the ACU was made at the 4th Ministerial Conference on Asian Economic Cooperation held in Kabul in December 1970.
- The United Nations Economics and Social Commission for Asia and the Pacific (ESCAP) took initiative for the establishment of ACU.
- In December 1970, after five banks (India, Nepal, Iran, Pakistan, and Sri Lanka) signed the agreement, a draft agreement was finalized to determine ACU at a meeting of senior government officials and central banks held in Bangkok.
- Later another countries like Bangladesh, Myanmar, Bhutan and therefore the Maldives signed the Agreement and thus the amount of ACU participants reached nine.
- Advantages of building a clearing union are as follows:
- It helps expand exports and imports among members relatively faster
- An adjustment process might be promoted to boost the international competitiveness of the members with similar distortions in trade and production.
- The union can help to secure a more balanced accounting thereby creating the conditions for the longer term convertibility of currencies of the member countries.
- It helps promote trade liberalization among the members
- It allows exploitation of scale economies by enlarged trade.
- A base are often provided for regional economic cooperation and for monetary and financial cooperation.