The United Arab Emirates has initiated talks with United States officials about a potential financial safety net in case escalating tensions linked to the Iran conflict push the Gulf state into a deeper economic stress, according to officials familiar with the discussions.
UAE Central Bank Governor Khaled Mohamed Balama raised the idea of a currency-swap line during meetings in Washington last week with U.S. Treasury Secretary Scott Bessent and representatives from the Treasury Department and the Federal Reserve. The meetings examined how a swap arrangement might operate as a contingency tool to provide dollar liquidity to the Emirati central bank.
Emirati authorities told U.S. counterparts they have, to date, largely avoided the most severe economic impacts from the conflict but acknowledged the possibility that they could need a financial lifeline if the situation deteriorates. Officials emphasized the discussions were preliminary and framed the swap proposal as a precautionary measure rather than a formal request.
Under a currency-swap line, the UAE central bank would obtain access to dollars at relatively low cost, enabling it to support the dirham or to bolster foreign-exchange reserves if faced with a liquidity squeeze. Emirati officials have not submitted a formal application for such a facility.
In parallel to outlining contingency planning with U.S. authorities, Emirati representatives have warned that, if pressures mount, the UAE could be compelled to conduct oil transactions in currencies other than the U.S. dollar - specifically citing the Chinese yuan or other alternatives. Such a shift in the currency composition of oil sales would present a potential challenge to the dominance of the U.S. dollar in energy trade.
Officials described the talks as precautionary and early-stage. There is, at present, no formal request for an established swap line, and the outcome of the consultations remains uncertain. The conversations reflect concerns about maintaining currency stability and ensuring access to dollar liquidity during a possible escalation of regional hostilities.
Context and implications
The discussions signal a focused effort by Emirati authorities to secure contingency options for dollar funding and reserve support, while also communicating the potential strategic impact on oil settlement currencies if conditions in the region worsen.