The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) have signed an MoU to promote innovation in financial products and services.
In 2021, RBI launched the Digital Rupee-Wholesale pilot. Starting from 2022-23, the Digital Rupee will be introduced.
Collaboration on CBDCs and Interoperability
Under the MoU, the two central banks will collaborate on emerging areas of FinTech, with a particular emphasis on Central Bank Digital Currencies (CBDCs). They will also explore the possibility of interoperability between the CBDCs issued by the CBUAE and RBI.
Reserve Bank of India and Central Bank of the UAE sign MoU to promote innovation in financial products and serviceshttps://t.co/N6b9x9SWyN
— ReserveBankOfIndia (@RBI) March 15, 2023
To facilitate cross-border transactions of remittances and trade using CBDCs, the CBUAE and RBI will work together to conduct proof-of-concept (PoC) and pilot(s) of a bilateral CBDC bridge.
This bilateral engagement to test cross-border CBDC use cases is expected to decrease costs and increase the efficiency of cross-border transactions, further strengthening the economic ties between India and the UAE.
The joint exploration of CBDCs and cross-border testing is expected to contribute to the development of an ecosystem, enhancing the capabilities of both central banks.
Technical Collaboration and Knowledge Sharing
The MoU also provides for technical collaboration and knowledge sharing on matters related to FinTech and financial products and services. The RBI and CBUAE collaboration is a major stride in advancing FinTech innovation and collaboration.