India and UAE have signed a Memorandum of Understanding (MoU) to collaborate on developing digital currencies.
What Happened: The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) signed the MoU in Abu Dhabi on Monday.
The MoU focuses on exploring various emerging areas of financial technology (fintech), with a particular emphasis on Central Bank Digital Currencies (CBDCs).
The two central banks will collaborate to enable innovation in fintech, financial products and services, and they will explore interoperability between the CBDCs of CBUAE and RBI, a statement released by India's central bank stated.
They will also jointly conduct proof-of-concept (PoC) and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade.
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Why It Matters: This bilateral engagement of testing cross-border use cases of CBDCs is expected to reduce costs, increase the efficiency of cross-border transactions, and further the economic ties between India and UAE, the statement said.
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