India’s central bank, the Reserve Bank of India (RBI), and the Central Bank of the United Arab Emirates (UAE) have agreed to collaborate on cross-border central bank digital currency (CBDC) transactions of remittances and trade. The initiative is “expected to reduce costs, increase efficiency of cross border transactions and further the economic ties between India and UAE,” India’s central bank explained.
India and UAE Collaborate on CBDCs
India’s central bank, the Reserve Bank of India (RBI), announced Wednesday a collaboration with the Central Bank of the United Arab Emirates to enhance both countries’ central bank digital currency (CBDC) efforts.
“The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) signed a Memorandum of Understanding (MoU) today in Abu Dhabi, to enhance cooperation and jointly enable innovation in financial products and services,” the RBI described.
“Under the MoU, the two central banks will collaborate on various emerging areas of fintech, especially central bank digital currencies (CBDCs) and explore interoperability between the CBDCs of CBUAE and RBI,” India’s central bank continued, elaborating:
CBUAE and RBI will jointly conduct proof-of-concept (PoC) and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade.
India began its digital rupee pilot in November last year for the wholesale sector, and in December for the retail sector. RBI Executive Director Ajay Kumar Choudhary said earlier this month that the country’s CBDC will act as an alternative to cryptocurrency.
Noting that “The MoU also provides for technical collaboration and knowledge sharing on matters related to fintech and financial products and services,” the RBI concluded:
This bilateral engagement of testing cross-border use case of CBDCs is expected to reduce costs, increase efficiency of cross border transactions and further the economic ties between India and UAE.
In February, the RBI revealed that 50,000 users and 5,000 merchants are using digital rupees.
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