RBI has recently sign MoU with UAE’s central bank to promote emerging areas of fintech, particularly central bank digital currency (CBDCs) cross-border transactions.
In order to foster new developments in fintech, notably cross-border transactions involving central bank digital currency (CBDCs), the Reserve Bank of India (RBI) and the central bank of the United Arab Emirates (UAE) have signed a memorandum of understanding (MoU).
“Under the MoU, the two central banks will collaborate on various emerging areas of fintech, especially central bank digital currencies (CBDCs) and explore interoperability between the CBDCs of the CBUAE and the RBI,” the report quoted the RBI as saying.
To enable cross-border CBDC transactions of trade and remittances, the two central banks would work together to develop a proof-of-concept and pilot of a bilateral CBDC bridge, it added.
To enable cross-border CBDC transactions of trade and remittances, the two central banks would work together to develop a proof-of-concept and pilot of a bilateral CBDC bridge, it added. According to the paper, the RBI stated that the bilateral testing of a cross-border use case for CBDCs is expected to lower costs, improve the effectiveness of cross-border transactions, and strengthen economic connections between India and the UAE.
It moreover offers technological cooperation and information exchange on topics pertaining to fintech and financial goods & services. In partnership with many banks, the RBI started CBDC pilot programmes in the wholesale and retail divisions last year. A digital currency supported by a regulator as legal money is known as a CBDC or e-rupee.
According to reports, more than 60 central banks across the world have shown interest in CBDCs, and certain implementations are already being tested in the retail and wholesale sectors.
“Many central banks are currently investigating risks, benefits and various designs of CBDC, mainly with a strong focus on domestic needs. Implications of CBDCs, even if only intended for domestic use, are expected to go beyond borders, making it crucial to coordinate work and find common ground among CBDCs of various jurisdictions. If coordinated successfully, the ‘clean slate’ presented by CBDCs may be leveraged to enhance cross-border payments,” the RBI had said in a concept note in October 2022.
This latest collab on CBDC will also positively affect crypto regulation.
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