RBI (Reserve Bank of India) and CBUAE (Central Bank of the United Arab Emirates) recently signed an MoU (Memorandum of Understanding.)
The development will allow the central banks to promote better collaboration and innovation in the financial domain. According to the MoU, both financial institutions will work together on different FinTech sectors.
Their primary focus will be on CBDCs (Central Bank Digital Currencies.) In addition, they will explore interoperability between the CBDCs of RBI and CBUAE. The central banks will also run PoC (proof-of-concept) and pilots of bilateral CBDC bridges.
This will be done to facilitate cross-border CBDC transactions of trade and remittances. The bilateral engagement in running cross-border use cases is likely to result in cost reduction, increased efficiency, and better economic relationships between UAE and India.
The Memorandum of Understanding also talks about knowledge sharing and technical collaboration between nations. Both parties will collaborate to enhance FinTech and financial services and products.
RBI released an official post and tweet to inform users about the MoU. Besides the MoU, the central banks have been undertaking multiple steps to progress on the CBDC front. Ever since India put the hammer down on virtual assets, the financial sector has been waiting for the nation to take strides in the industry.
On the other hand, CBUAE has also revealed figures regarding its total bank investments. According to the central bank, the figure crossed 528 billion Dirhams in 2022. The amount accounted for an 11.5% yearly increase compared to the 473.2 billion Dirhams in 2021.
Seeing the growing uncertainty surrounding digital assets in India, the latest move may provide a window of opportunities to the sector.