In a significant development for cross-border payments, the United Arab Emirates-based payment system Buna is poised to welcome two new major currencies – the Pakistani rupee and the Chinese yuan. This expansion, scheduled for implementation by 2024-25, marks a notable step towards enhancing financial connectivity across regions.
With Buna already facilitating transactions for a range of currencies and banks, the inclusion of the rupee and yuan underscores a shift towards diversifying currency settlements and reducing reliance on traditional channels. This move not only promises to streamline cross-border transactions but also signals Pakistan’s and China’s commitment to exploring alternative financial avenues for international trade and cooperation.
A payment system called Buna, based in the United Arab Emirates, plans to expand to include currencies from Pakistan, China, India, and several African and European countries by 2024-25.
Currently, Buna is connected to 108 banks across 14 countries, and more than 105 additional banks are expected to join soon. It already handles six currencies, including those from the Arab region, the US dollar, and the euro, making international fund transfers quicker and cheaper.
Ren Haiping, from the China Centre for International Economic Exchanges (CCIEE), believes including the Pakistani rupee in Buna will make cross-border transactions for Pakistani banks more efficient, boosting international economic cooperation for Pakistan.
Last year, Pakistan started using the Chinese currency (RMB) to pay for oil from Russia, marking a significant shift in its economic development. This move simplified transactions and reduced costs.
With many countries questioning the dominance of the US dollar in global trade, Pakistan’s decision to join Buna is seen as a step towards using different currencies and reducing reliance on the dollar. Joining Buna is another step for Pakistan in exploring financial alternatives and moving away from relying solely on the dollar.
As the global financial landscape continues to evolve, the inclusion of the rupee and yuan in Buna represents a significant step towards fostering greater economic resilience and cooperation among nations.
Published in The Express Tribune, February 27th, 2024.
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