The Reserve Bank of India and the Central Bank of the UAE join hands to kickstart the revolution and develop CBDC. Both banks signed an MoU in Abu Dhabi on March 15th, to create innovation in financial products and services.
The RBI released a press statement stating that the Central Bank of the UAE and the Reserve Bank of India had signed a memorandum of understanding. They will work on developing the Central Bank Digital Currency.
As per the MoU, both banks will work on the development of a bilateral CBDC. The MoU will use proof-of-concept (PoC) and pilot projects to promote cross-border trade as well as CBDC remittance transactions.
The MoU would contribute to other digital innovation activities between the CBUAE and the RBI as well. Moreover, the contract will develop joint digital currency experimentation between the two parties.
The basic idea is that this bilateral testing of CBDC cross-border use cases will lower costs. It will improve the effectiveness of cross-border transactions and strengthen economic ties between India and the UAE.
The Purpose of CBDC Development
The major purpose of the agreement is to promote cross-border digital currency transactions for commerce and remittances. The MoU also covers technical cooperation and knowledge exchange on fintech-related topics, including new trends, laws, and policies, as well as financial goods and services.
Related Reading | India’s Largest Retail Chain, Retailer Reliance, Will Accept CBDC In Its Stores
The basic purpose of the collaboration is to investigate interoperability between the CBDCs of the two countries. This measure might make cross-border transactions more efficient and transparent.
India, in particular, has been running CBDC pilots since 2022. India has been testing retail Central Digital Currency in 15 cities, and around 50,000 customers, as well as 10,000 merchants, have been part of this experiment. The country also plans to launch a full-scale CBDC (retail) by the end of 2023.