The RBI and CBUAE entered into an MoU to boost cooperation in the innovation of financial services.
Under the memorandum, the countries would analyze the interoperability of their CBDCs. The RBI announced that the regulatory body has entered into a Memorandum of Understanding (MoU) with the CBUAE in Abu Dhabi to jointly cooperate in multiple zones of fintech.
Interestingly, the memorandum would offer “technical collaboration and knowledge sharing” on different topics in the area of FinTech and financial products and services.
Subsequent to the RBI’s announcement, the national public radio broadcaster of India, All India Radio, shared a Twitter thread about the agreement between India and the UAE:
Significantly, as per the announcement of the RBI, the MoU is intended to establish an association between the central banks of India and the UAE on different evolving fields of FinTech and these fields include the analysis of the interoperability of the Central Bank Digital Currencies (CBDCs) of both India and the UAE.
In addition, RBI affirmed that the banks would cooperate in conducting proof-of-concept (PoC) and pilots of a bilateral CBDC bridge, quoting:
CBUAE and RBI will jointly carryout proof-of-concept (PoC) and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade.
Particularly, as RBI has confirmed, the bilateral engagement of the analysis of CBDCs between the two countries is evidently focused on reducing costs, increasing the efficiency of cross-border transactions, and developing economic ties between India and the UAE.
Digital currency
It is remarkable that India has offered retail CBDC in several cities, through which the country has been successful in reaching more than 50,000 customers and 10 merchants. The country has also been planning to launch a digital currency by the end of 2023.
Apparently, the collaboration between India and the UAE would benefit the countries’ positions in the crypto space and contribute to their further development.
The RBI earlier said this bilateral engagement of testing the cross-border use case of CBDCs was expected to reduce costs, increase the efficiency of cross-border transactions and further the economic ties between India and UAE. The memorandum of understanding (MoU) also offers technical collaboration and knowledge sharing on matters related to fintech and financial products and services.
Reserve Bank of India Deputy Governor T Sankar Rabi said eight banks participated in the central bank digital currencies project, which was launched by the central bank .
The deputy governor said the pilot project currently includes the five cities of Mumbai, New Delhi, Bengaluru, Bhubaneswar and Chandigarh. The RBI launched the first pilot of the digital rupee on December 1, 2022.
Under the Indian Presidency’s theme of “One Earth, One Family, One Future”, the Finance Ministers and Central Bank Governors of G20 countries, which met on February 24-25 in Bengaluru, dedicated to enhancing international policy cooperation and steering the global economy towards securing strong, sustainable, balanced and inclusive growth.
According to a statement – G20 Chair’s Summary and Outcome Document — released by G20 members on February 25, the members said they would remain to explore the macro-financial implications of the potential introduction and widespread adoption of central bank digital currencies (CBDCs), and their effects on cross-border payments, as well as on the international monetary and financial system.
