Asian Clearing Union

asian clearing union

At the initiative of the United Nations Economic and Social Commission for Asia and the Pacific(ESCAP), the ACU was founded in 1974.

The purpose of the organization was to encourage regional cooperation, economize foreign exchange reserves, and facilitate trade among member countries. In addition to promoting regional trade, the ACU is a regional payment mechanism for clearing payments among member states through correspondent banks.

Asian clearing union is one of the important topics of the UPSC Exam. This article will help you to understand what is ACU? What are its objectives, when it was established, and so on?

What Is Asian Clearing Union?

The Asian Clearing Union is a regional organization that aims to promote currency trade and facilitate payments between its member states. Its headquarters are in Tehran, Iran. In addition to providing an efficient means of currency exchange, the ACU also helps coordinate national policies. 

Initially, the ACU was formed as multilateral cooperation among Asian countries. By facilitating payments between members, the group helps to reduce the costs associated with clearing international transactions.

When Was The Asian Clearing Union Established?

The ACU was founded in December 1974, when the countries in the region were having settlement difficulties, primarily because of resource shortages. A year later, in November 1975, the ACU started its operations.

What Are The Objectives Of Asian Clearing Union?

The ACU has the following objectives:

  1. To offer a mechanism to settle payments for existing international transactions among participant countries on a multilateral basis.
  2.  To encourage the use of participants’ currencies in current between their respective territories and, thus affecting economies in the use of participants’ foreign reserves and transfer costs.
  3. To encourage closer contact among the banking systems in the participants’ respective countries and monetary cooperation among them, hence assisting in the growth of trade and economic activities among the ESCAP region’s member nations.
  4. To facilitate currency SWAP arrangements among participants in order to temporarily provide them with Asian Monetary Units (AMUs).

Members Of The Asian Clearing Union

The Asian Clearing Union has the following members:

  1. India: Reserve Bank of India
  2. Bangladesh: Bangladesh Bank
  3. Iran: Central bank of the Islamic Republic of Iran
  4. Pakistan: State Bank of Pakistan
  5. Maldives: Maldives Monetary Authority
  6. Myanmar: Central Bank of Myanmar
  7. Bhutan: Royal Monetary Authority of Bhutan
  8. Nepal: Nepal Rastra Bank
  9. Sri Lanka: Central Bank of Sri Lanka

Eligibility Criteria To Participate In The Asian Clearing Union

The following are the requirements for membership in the Asian Clearing Union:

  1. A participating member of the ACU can be any central bank or monetary authority of a regional member.  Additionally, any associate member of ESCAP or monetary authority from a non-ESCAP nation may apply to join the ACU.
  2. It is prohibited for an ACU member state to take part in any other clearing organization or arrangement.

What Is The Procedure For The Settlement Of ACU Transactions?

As much as is practical, the majority of transactions should be settled immediately through the accounts held by AD Category-l banks with banks in the other participating countries subject to operational guidelines. It indicates that payments for exports and imports should be made through the appropriate bank rather than a direct transfer. For transactions other than exports and imports, direct remittance should be used to settle the account.

make your upsc preparation faster with examarly

Unit Of Settlement Of ACU Transactions

The Asian Monetary Units (AMUs) are the common unit of account for ACU and are denoted as ‘ACU Dollar,’ ‘ACU Euro,’ and ‘ACU Yen,’ each of which is the same as one US Dollar, one Euro, and one Japanese Yen.

AMUs must be used as the unit of currency for all payment instruments under ACU.

Which Payments And Transfers Are Acceptable Via ACU?

The following payments are accepted  for clearing by the Asian Clearing Union:

  1. From a resident of one member state to a resident of another member state.
  2. Any payment approved and allowed by the payer’s country of residence.
  3. For import-export transactions on delayed payment terms, any payment can be made between member states.
  4. Any payments made in connection with the import or export of commodities and any other payments mutually accepted by the participants.
  5. Payments may be made using any payment denominated in Asian Monetary Units (AMUs), such as the ACU Euro, ACU Dollar, ACU Yen, etc.
  6. Since July 2016, it has been possible to settle current account transactions including trade transactions in the currency of “Euro” outside of the Asian Clearing Union system.

Which Payments And Transfers Are Not Allowed Via ACU?

The ACU cannot be used to settle the following transfers and monetary transactions:

  1. Any transaction that is other than an export-import exchange among ACU members. The RBI and other participants, however, may only transact to the extent of any existing agreement between them.
  2. Any transfers of money among India, Nepal, and Bhutan. Unless a resident of Nepal, who is an importer resident allowed to carry out foreign exchange transactions by the Nepal Rastra Bank, buys products from a resident of India. Such transactions may be settled using methods other than ACU
  3. Until further notice, all permissible current account transactions, including those involving trade with Iran, must be settled in a currency outside the ACU framework (i.e. must be settled in a currency other than the ACU).

Study like a pro with Examarly. This app revolves around the UPSC preparation at your own pace. Here you will get the curated study material that will help you to leverage your preparation for the IAS exam and hence aids you to ace your UPSC CSE exam.


The ACU was formed to promote multilateral cooperation between its member countries and their central banks and monetary authorities. The Asian Clearing Union (ACU) is now used as a payment system in which participants settle payments for intra-regional monetary transactions on a net multilateral basis among the participating central banks. The clearing union’s major goals are to make it easier for member countries to make payments for eligible transactions, hence strengthening trade and financial links between them.

FAQs on Asian Clearing Union

What Is ACU Full Form?

The full form of ACU is Asian Clearing Union.

Who Is The Chairman Of ACU?

Chiranjibi Nepal is the chairman of the Asian clearing union.

Who Is The Secretary-General Of ACU?

Lida Borhan-Azad is the secretary-general of the Asian clearing union.

make your upsc preparation faster with examarly

Previous Article
timetable for upsc preparation

Timetable For UPSC Preparation In 2022-23: Everything You Need To Know

Next Article
national flag of india information

National Flag Of India Information