The Reserve Bank of India has signed a memorandum of understanding (MoU) with the Central Bank of the UAE for promoting various emerging areas of fintech, especially central bank digital currency (CBDCs) cross-border transactions.
Key highlights
- 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 the CBUAE and the RBI.
- The two central banks will jointly conduct a proof-of-concept and pilot of a bilateral CBDC bridge, to facilitate cross-border CBDC transactions of remittances and trade.
- The bilateral engagement of testing a 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 the UAE.
- It also provides for technical collaboration and knowledge-sharing on matters related to fintech and financial products & services.
RBI CBDC
- The RBI launched pilot runs of CBDC in both wholesale and retail segments in 2022, in collaboration with several banks.
- A CBDC or e-rupee is a digital currency backed by a regulator as a legal tender.
- Globally, more than 60 central banks have reportedly expressed interest in CBDCs, with a few implementations already under pilot across both retail and wholesale categories.
