India and the United Arab Emirates (UAE) have partnered together to further the development of each other’s Central Bank Digital Currencies (CBDCs).
The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) yesterday signed a Memorandum of Understanding to jointly drive innovation in various financial products and services, especially in CBDCs.
According to a press release by the RBI yesterday, both countries’ central banks will “jointly conduct proof-of-concept (PoC) and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade.”
Both nations have long been developing their CBDCs – digital versions of national currencies issued and distributed by central banks – amid global efforts to begin establishing, spending and trading in the new monetary system.
In November last year, the RBI began a wholesale pilot program for its CBDC, the digital rupee and, a month later, India’s Apex Bank launched its first CBDC retail pilot which involved the participation of eight banks in four major cities. 15 cities overall are subject to CBDC testing.
The digital rupee has reportedly had significant success so far, with the RBI announcing last month that it had been adopted by 50,000 users and 5,000 merchants. According to reports, if the pilot programs continue to do well, the RBI could aim to have a full-scale roll out of its CBDC by the end of 2023.
The UAE has also been a major developer of its own digital currency over the past few years and, in October last year, completed the world’s largest pilot of a CBDC up till then. The establishment and roll out of its e-Dirham is a key part of the Gulf nation’s 2023-2026 economic strategy under its Financial Infrastructure Transformation (FIT) program, which also consists of a domestic card scheme, a financial cloud and an instant payments platform.