The UAE trade minister said joining Washington’s small group of swap-line partners would be an ‘elite matter,’ not a bailout.
The United Arab Emirates said it’s discussing a currency swap line with the United States, an arrangement that would allow its central bank to tap U.S. dollars during periods of market stress.
“We have this discussion and conversation with many, it’s part of an elite group that the U.S. is having this swap policy with. They are only having it with five countries,” UAE trade minister Thani Al Zeyoudi said at a conference in Abu Dhabi on May 4.
“Being part of that group means that transactions … trade, investments between both nations reach a level where that swap is highly needed … so it is an elite matter, [it] is not about bailing out,” he said at the “Make It In The Emirates” event.
Al Zeyoudi did not provide further details on the discussions, size or timeline for an agreement on the currency swap line with the United States.
According to American think tank The Brookings Institution, swap lines are arrangements under which the Federal Reserve lends foreign central banks U.S. dollars so they can supply them to foreign financial institutions.
For example, it said that they “were key to the Fed’s efforts to stabilize financial markets during the Global Financial Crisis and at the start of the COVID pandemic.”
The U.S. Federal Reserve has permanent standing central bank currency swap lines with five other major central banks—the Bank of Canada, the Bank of Japan, the European Central Bank, the Bank of England, and the Swiss National Bank.
U.S. Treasury Secretary Scott Bessent said last month that a number of allies in the Gulf region and in Asia had requested currency swap lines with the United States.
“Swap lines, whether it’s from the Federal Reserve or the Treasury, are to maintain order in the dollar funding markets and to prevent the sale of the U.S. assets in a disorderly way,” Bessent told lawmakers at an April 22 Senate Appropriations subcommittee budget hearing.
“So the swap line would benefit both the [United Arab Emirates] and the United States, and as I said, numerous other countries, including some of our Asian allies, have also requested them.”
By Owen Evans
