The initiative was taken after members concluded that settlement of deals backed by greenback started becoming cumbersome and expensive for traders. [break]
Governors and finance secretaries of SAARC member nations gave the nod to the concept at the Governors Symposium of SAARC Finance, which concluded in Pokhara on Thursday. A formal agreement will be signed only after conducting an extensive study.
The proposal was floated by net oil importing countries like Nepal, India and Bangladesh that believe dealing in local currency with oil exporting countries like Iran would prove beneficial.
“The topic of ways to use local currency in trade was discussed extensively between SAARC countries and the Iranian central bank,” Nepal Rastra Bank Governor Yuvraj Khatiwada told the media. “We reached a conclusion that the use of local currency can further facilitate trade and make the payment process much easier.”
During the three-day symposium held in the western Nepali city, India has announced establishment of US$2-billion emergency currency swap fund to assist nations facing liquidity problems. The announcement was made by Reserve Bank of India Governor D Subbarao. The fund will give any signatory nation access to short-term loan of up to $400 million.
The meeting was participated by central bank and finance ministry officials of Nepal, Pakistan, India, Sri Lanka, Bhutan, Maldives, Myanmar, Bangladesh and Afghanistan, along with representatives of the World Bank and Asian Development Bank.
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