Transforming Remittances through Instant Payments
On October 3, the United Arab Emirates (UAE) and Morocco took a significant step towards revolutionizing cross-border financial transactions by signing two pivotal memoranda of understanding (MoUs). This agreement aims to replace the costly correspondent banking systems that currently serve approximately 800,000 Moroccans residing in the UAE, enabling direct, real-time digital transfers at a fraction of the existing costs. The MoUs were formalized at the Central Bank of the UAE (CBUAE) headquarters in Abu Dhabi by CBUAE Governor Khaled Mohamed Balama and Bank Al-Maghrib (BAM) Governor Abdellatif Jouahri. Notably, this partnership marks Morocco as the first North African nation to join CBUAE's expanding network of bilateral instant payment linkages, which already connects various regions including South Asia, Southeast Asia, East Africa, and the Gulf.
The agreements delineate clear objectives. The first MoU focuses on banking supervision and Islamic finance, promoting information sharing among banks and financial institutions, coordinating supervisory practices, and aligning Shariah governance frameworks. This includes developing cross-border structures for trade finance and infrastructure investment. The second MoU is more technically ambitious, aiming to establish a direct interlink between the instant payment platforms of the UAE and Morocco, including their national card switches and financial messaging systems. It also encompasses cooperation on Central Bank Digital Currency (CBDC) development and regulatory frameworks for crypto-assets and stablecoins. Balama expressed optimism about the initiative, stating, "Through this cooperation, we look forward to exchanging supervisory expertise, developing Islamic finance solutions, and exploring opportunities to strengthen links between payment systems, contributing to a more efficient and innovative financial sector and supporting economic and trade relations between the two countries."
Enhancing Financial Connectivity and Reducing Costs
The CBUAE has been actively pursuing bilateral payment-linkage agreements under its Financial Infrastructure Transformation (FIT) Programme, which was launched in February 2023 with an ambitious goal of achieving full domestic integration by 2026. The strategy involves signing agreements with key partner nations to facilitate direct payment rails for their diaspora communities in the UAE, subsequently transitioning these frameworks into live integrations as technical and regulatory groundwork is laid. Prior agreements have been established with various countries, including India, Kenya, and the Philippines, but the Morocco agreement stands out due to the shared technical foundation of both countries' payment systems.
Both Morocco's Virement Instantané service and the UAE's Aani platform are built on the ISO 20022 international messaging standard, allowing seamless communication without the need for translation layers. While this compatibility simplifies messaging exchanges, it does not eliminate other complexities such as liquidity arrangements, compliance with anti-money laundering (AML) and know your customer (KYC) regulations, and the rules governing settlement finality for disputed transactions. However, the establishment of this shared standard marks a significant step forward in the integration process.
Morocco's Virement Instantané service, which commenced operations on June 1, 2023, enables instantaneous transfers between different banks in Morocco, boasting an impressive processing speed of under 20 seconds. In its early months, the service managed an average of around 46,000 transactions daily, a figure that reportedly settled to about 31,000, with peak days surpassing 110,000 transactions. In contrast, the UAE's Aani platform, developed by an Accenture-led consortium, also operates under the ISO 20022 standard and is designed for continuous availability, supporting various transfer methods including QR code and mobile number transactions.
For the 800,000 Moroccans in the UAE, the potential benefits of this new payment infrastructure are substantial. Remittances from the Moroccan diaspora accounted for a remarkable MAD 122 billion (approximately $13.4 billion) in 2025 alone, making it the second-largest source of foreign currency for Morocco after tourism. Presently, remittance costs for Moroccans are among the highest in the world, averaging around 8%, which is significantly above the G20 and UN Sustainable Development Goal target of reducing average remittance costs to below 3% by 2030. A direct UAE-Morocco payment corridor could redirect a considerable sum back to families in Morocco, enhancing their economic well-being.
As the two nations continue to strengthen their economic relationship, the agreements pave the way for improved financial efficiency, faster processing of cross-border transactions, and the exploration of CBDCs in payments between the countries. Furthermore, this initiative not only addresses the remittance needs of individuals but also supports broader trade and investment goals, with bilateral trade reportedly increasing by 30% from 2022 to 2023, reaching approximately $1.3 billion.
As reported by techtimes.com.
