In the settlement system under the Asian Clearing Union (ACU) Mechanism, all instruments of payments are required to be denominated in Asian Monetary Unit. The Asian Monetary Unit is the common unit of account of ACU and is equivalent in value to one U.S.Dollar. Hitherto, the Asian Monetary Unit was denominated only as ACU dollar.[ ‘ACU Euro’ which was in operation has been temporarily suspended with effect from July 01, 2016]. In India, RBI undertakes to receive and pay U.S. dollars to and from authorised dealers for the purpose of funding or for repatriating the excess liquidly in the ACU monetary unit accounts maintained by the authorised dealer with their correspondents in the other participating countries.
RBI on Tuesday (March 17, 2020) notified that “The Board of Directors of ACU has decided to permit Japanese Yen for settling payments among the ACU member countries. Accordingly, clause (a) and (b) of Article IV of the General Provisions of Agreement establishing the Asian Clearing Union have been revised and the Asian Monetary Unit is now denominated as “ACU Dollar”, “ACU Euro” and “ACU Yen” which shall be equivalent in value to one US Dollar, one Euro, and one Japanese Yen respectively”.
The necessary amendments to FEMA regulations 3 and 5 are made reflecting the above, have been notified in the Gazette of India on March 06, 2020, it said. It is further notified by the Central Bank of the Country that effective March 06, 2020; participants in the Asian Clearing Union will have the option to settle their transactions either in ACU Dollar or ACU Euro or in ACU Japanese Yen. Further, AD banks are permitted to open and maintain ACU Dollar, ACU Euro and ACU Japanese Yen accounts with their correspondent banks in other participating countries and all eligible payments are required to be settled by the concerned banks through these accounts, it said. To know more on Asian Clearing Union read below post.