UAE Central Bank and RBI sign MoU to facilitate cross-border CBDC transactions


UAE

In order to strengthen cooperation and jointly foster innovation in financial goods and services, the Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates(CBUAE) inked an MoU for innovation in financial products in Abu Dhabi.

In accordance with the Agreement, the two central banks will work together on a number of cutting-edge fintech projects, particularly those involving central bank digital currencies (CBDCs), and investigate the interoperability of the CBDCs of CBUAE and RBI. According to a statement from the RBI, CBUAE and RBI will work together to perform the proof-of-concept (PoC) and pilots of a bilateral CBDC bridge to make cross-border CBDC commerce and remittance operations easier.

The RBI stated on Wednesday that this bilateral testing of CBDCs' cross-border use case was expected to lower costs, improve the effectiveness of cross-border transactions, and strengthen ties between India and the UAE on the economic front. Moreover, technical cooperation and information exchange on issues pertaining to fintech and financial goods and services are provided for in the memorandum of understanding (MoU).

Eight banks participated in the central bank's digital currency experiment, which was introduced on February 8 by the central bank, according to Reserve Bank of India Deputy Governor T Sankar Rabi's statement from last month.

The trial scheme presently includes Mumbai, New Delhi, Bangalore, Bhubaneswar, and Chandigarh, according to the deputy governor. On December 1, 2022, the RBI began the first pilot programme for the digital rupee.

The Finance Ministers and Central Bank Governors of the G20 countries met on February 24 and 25 in Bengaluru under the theme of the Indian Presidency, "One Earth, One Family, One Future," and made a commitment to strengthening international policy cooperation and guiding the global economy towards securing strong, sustainable, balanced, and inclusive growth.

G20 members said they would continue to investigate the macro-financial implications of the potential introduction and widespread adoption of central bank digital currencies (CBDCs), as well as their effects on cross-border payments and the global monetary and financial system, in a statement that was released by the G20 on February 25.

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