China's Cross-Border Interbank Payment System (CIPS) and the central bank of the United Arab Emirates (UAE) have signed a memorandum of understanding to enhance cross-border payment cooperation at the ASEAN-China-GCC Economic Forum 2025 in Kuala Lumpur, the capital of Malaysia, the People's Bank of China (PBOC), China's central bank, announced on Wednesday.
The signing is expected to improve payment infrastructure and the efficiency of cross-border payments, according to an online statement by the PBOC, which administers and regulates CIPS.
Accordingly, CIPS and the central bank of the UAE will work together to develop a cross-border payment connectivity program, which will provide local currency clearing services for financial institutions in the Middle East and North Africa.
The two sides will also deepen exchanges on risk management and compliance, and make cross-border payment systems safer and more stable, according to the statement.
China, UAE boost cross-border payment cooperation
Rising military tensions in the Persian Gulf are casting a heavy shadow over Iraq's economy, raising concerns about the fate of oil exports and maritime trade.
The recent targeting and burning of two foreign tankers carrying Iraqi oil within Iraq's territorial waters marks a significant escalation, signaling that a closure of the Strait of Hormuz is now a tangible threat. Such a scenario would halt Iraq's oil exports to global markets, dealing a severe blow to an economy that relies on oil revenues as its main source of funding for both operational and investment budgets.
With the main maritime route for its oil exports disrupted, Iraq is now looking to the central bank's reserves to cushion the shock of lost oil revenues and to ensure the payment of government employees' salaries.
"The other impact Iraq fears is the economic fallout from the closure of the Strait of Hormuz. This will affect Iraq just as it will other countries, but it will hit Iraq harder, because Iraq relies mainly, almost 90 percent of its resources, on oil sales. So the economic impact on Iraq will be significant. The consequences are both political and economic," said Hamza Mustafa, an Iraqi journalist.
The Iraqi government has few alternatives for exporting oil through other routes. The Ceyhan pipeline, which carries Iraqi oil through Turkey, remains shut, leaving the Gulf, now a conflict zone, as the only outlet. Recently, Iraqi officials have begun discussing the need to boost non-oil revenues to mitigate the economic impact of the ongoing conflict.
"We are doing everything in our power to keep this war away from our country, because Iraq cannot withstand more conflict. Our country has reached a critical economic stage in recent years, both before and after the previous regime. We have learned many lessons. As parliament, we will push for decisions that serve our citizens and our country," said Saqr Al-Muhammadawi, a member of Iraq's parliament.
According to a statement by Alireza Tangsiri, commander of the Iranian Navy, the Strait of Hormuz has not yet been militarily blocked and is merely under control. The strait "is only closed to the tankers and ships belonging to our enemies, to those who are attacking us and their allies. Others are free to pass," he said.
Gulf tensions raise fears for Iraqi's oil-funded economy
