"It's good that these two countries act quickly to further develop the CBDC."
India's central bank, the Reserve Bank of India (RBI) signed an agreement with the Central Bank of the United Arab Emirates (CBUAE) as part of its efforts to further develop the two countries' central bank digital currency (CBDC).
Explained in more detail, RBI and CBUAE signed a Memorandum of Understanding (MoU) in Abu Dhabi to enable innovation in financial products and services together.
Under the MoU, the two central banks are to cooperate in various emerging areas of fintech, especially CBDC and explore interoperability between the CBUAE and the RBI.
CBUAE and RBI are expected to work hand in hand to carry out a proof-of-concept (PoC) and two-way CBDC pilot that can further facilitate remittance transactions and cross-border CBDC trading.
According to Ajay Kumar Choudhary, the Executive Director of the RBI said his country's CBDC will act as an alternative to crypto after they launched a pilot digital rupee for the wholesale sector in November last year and the retail sector in December.
He added that the MoU also provides technical cooperation and knowledge sharing on matters related to fintech products and services including finance.
The collaboration, which can test the cross-border use case of CBDC, is expected to be able to reduce costs, increase transaction efficiency and expand economic relations between India and the UAE.
Meanwhile, the RBI in February revealed that 50,000 users and 5,000 merchants have used the digital rupee.
