The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (UAE) announced on March 15 that they have signed a memorandum of understanding on cooperation and innovation in financial services.
The parties will specifically focus on central bank digital currency (CBDC) interoperability and will develop proof-of-concept and pilot programs for CBDC bridges to facilitate remittances and trade. They noted that such a bridge would reduce costs and improve transaction efficiency, and strengthen economic ties.
Indian and UAE bank officials hold A rupee-dirham payment system using correspondent banks was discussed in February. The system has been in development for a year. Payments are currently settled in US dollars for these countries.
Although remittances from the Gulf region fell by 50% compared to 2016-2017, the UAE remains India’s main source of remittances, accounting for 17-18% of the total remittances of around $87 billion as of July 2022.UAE topped India’s source until COVID outbreak, when it was displaced by the United States.
related: 5 Countries Leading Blockchain Adoption
India and the UAE may investigate retail CBDCs to handle remittances.India currently Has a domestic digital rupee pilot project Has 50,000 users and 5,000 participating merchants.The RBI also reported in late February that it had Completed approximately 800,000 transactions Its wholesale CBDC is worth $134 million, and it has been testing the offline functionality of its CBDC.
India also recently integrated its non-blockchain Unified payment interface with Singapore’s PayNow system.
UAE launches a nine-part financial transformation plan, and Announcement of intent to launch a CBDC February for domestic and cross-border us.Even before that, UAE banks Participate in the mBridge pilot project, and banks in Hong Kong, China and Thailand use CBDC for cross-border transfers. Additionally, Thani Al-Zeyoudi, the UAE Minister of State for Foreign Trade, expects cryptocurrencies to “play an important role in the future of trade in the UAE.” Speaking at the World Economic Forum in January.