What is the full form of ACU
ACU stands for Asian Currency Union. It is a payment arrangement that allows participants settle payments for intra-regional transactions among the participating banks on a net multilateral basis. The main objective of this clearing union is to facilitate payments for eligible transactions among member countries in order 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 establish 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 establish ACU at a meeting of senior government officials and central banks held in Bangkok. Later some other countries like Bangladesh, Myanmar, Bhutan and the Maldives signed the Agreement and thus the number of ACU participants reached nine.
Some of the benefits of establishing a clearing union are as follows: