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The Reserve Bank of India (RBI) will test new technologies in a joint pilot with Crypto Hub UAE. Notably, RBI has frequently opposed private cryptocurrencies while Dubai and Abu Dhabi compete to lead the sector.
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, the RBI said.
What lies ahead
According to the statement, the two countries will examine CBDC interoperability between the Central Bank of the United Arab Emirates (CBUAE) and RBI. It notes, “CBUAE and RBI will jointly conduct proof-of-concept (PoC) and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade.”
Meanwhile, the bilateral agreement is anticipated to lower costs and improve the effectiveness of cross-border transactions. It also aims to strengthen the economic links between the two countries. Additionally, technical cooperation and information exchange on topics pertaining to Fintech and financial services are provided in the MoU
The Mou of states
As per the Mou, both central banks will work together to explore Central Bank Digital Currencies and investigate interoperability between the CBDCs of CBUAE and RBI. They will conduct proof-of-concept and pilot tests of bilateral CBDC bridge to facilitate cross-border transactions of remittances and trade. This collaboration is expected to increase efficiency and reduce costs in cross-border transactions, furthering the economic ties between India and UAE.The MoU also includes technical collaboration and knowledge sharing on matters related to Fintech and financial products and services.
This collaboration will help both central banks enhance their capabilities and contribute to the development of a robust financial ecosystem.The collaboration between RBI and CBUAE is a significant step towards promoting innovation and collaboration in the field of FinTech. The joint exploration of CBDCs and cross-border testing is expected to pave the way for increased efficiency and cost reduction in cross-border transactions, benefiting both India and UAE.
Right from the RBI
The Reserve Bank of India (RBI) and the Central Bank of the UAE sign MoU to promote innovation in financial products and services The Reserve Bank of India and the Central Bank of the United Arab Emirates signed a Memorandum of Understanding in Abu Dhabi on Wednesday to promote innovation in financial products and services.
As per the MoU, both central banks will work together to explore Central Bank Digital Currencies and investigate interoperability between the CBDCs of CBUAE and RBI. They will conduct proof-of-concept and pilot tests of the bilateral CBDC bridge to facilitate cross-border transactions of remittances and trade. This collaboration is expected to increase efficiency and reduce costs in cross-border transactions, furthering the economic ties between India and UAE.
The MoU also includes technical collaboration and knowledge sharing on matters related to Fintech and financial products and services. This collaboration will help both central banks enhance their capabilities and contribute to the development of a robust financial ecosystem. The collaboration between RBI and CBUAE is a significant step towards promoting innovation and collaboration in the field of FinTech. The joint exploration of CBDCs and cross-border testing is expected to pave the way for increased efficiency and cost reduction in cross-border transactions, benefiting both India and UAE.
