In order to cooperate on central bank digital currencies (CBDCs), India and the United Arab Emirates (UAE) have signed a Memorandum of Understanding (MoU). The Reserve Bank of India (RBI) and the Central Bank of the UAE (CBUAE) in Abu Dhabi made the statement on Wednesday.
The central banks will look at the viability of CBDC interoperability between the two nations. Also, they will run pilots and proof-of-concept (PoC) tests for a bilateral CBDC bridge that will enable cross-border CBDC trade and remittance operations.
A retail CBDC project has been running in India; it was recently expanded to 15 cities, over 50,000 customers, and 10,000 merchants. By the end of 2023, the nation hopes to open a full-scale retail CBDC.
India and the UAE's partnership is anticipated to improve the global financial system and encourage the adoption of digital currencies. Strong trade and economic ties exist between the two nations, and the collaboration is anticipated to increase cross-border trade.
CBDCs Digital Fiat Currencies That Have Central Bank Support
Compared to traditional currencies, they provide a number of benefits, such as quicker and less expensive transactions, more security and transparency, and expanded financial inclusion.
China is now leading the race to create a digital yuan and is one of many nations looking at the feasibility of establishing CBDCs. The Bank of Japan (BOJ) is now running tests to see if a digital yen is feasible, while the European Central Bank (ECB) has also declared ambitions to introduce a digital euro by 2025.
Collaboration between India and the UAE is a step in the right direction for CBDC adoption in the international financial system. It is anticipated that this will open the door for other nations to collaborate in creating and testing CBDCs, resulting in a more integrated and effective financial system.