The Reserve Bank of India (RBI), India’s central bank, and the central bank of the United Arab Emirates (UAE) agreed to cooperate on cross-border central bank digital currency (CBDC) transactions for remittances and trade The two banks have agreed to cooperate on cross-border central bank digital currency (CBDC) transactions for remittances and trade. The initiative is “expected to reduce costs, increase the efficiency of cross-border transactions, and further strengthen economic ties between India and the UAE,” the Indian central bank explained.
India and UAE cooperate on CBDC
India’s central bank, the Reserve Bank of India (RBI), announced Wednesday that it will cooperate with the Central Bank of the United Arab Emirates to strengthen 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 today in Abu Dhabi to enhance cooperation and joint innovation in financial products and services,” RBI explained.
“Under the MoU, the two central banks will cooperate in various emerging areas of fintech, especially in Central Bank Digital Currency (CBDC) and explore interoperability between CBUAE and RBI CBDC,” the Indian central bank continued and elaborated.
CBUAE and RBI will jointly conduct proof of concept (PoC) and pilot(s) of bilateral CBDC bridges to facilitate cross-border CBDC transactions for remittances and trade.
India began piloting digital rupees in the wholesale sector last November and in the retail sector in December; RBI Executive Director Ajay Kumar Choudhary said earlier this month that the country’s CBDCs will serve as an alternative to cryptocurrencies.
Noting that “the MoU also provides for technical cooperation and knowledge sharing on matters related to fintech and financial products and services,” RBI concluded.
This bilateral effort to test cross-border use cases for CBDCs is expected to reduce costs, increase efficiency of cross-border transactions, and further develop economic relations between India and the UAE.
In February, RBI revealed that 50,000 users and 5,000 merchants were using digital rupees.
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