India’s central bank, the Reserve Bank of India (RBI), announced on Wednesday a collaboration with the Central Bank of the United Arab Emirates to enhance both countries’ central bank digital currency (CBDC) efforts.

The RBI stated, “The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) signed a Memorandum of Understanding (MoU) today in Abu Dhabi, to enhance cooperation and jointly enable innovation in financial products and services.”

The Indian Central bank continued elaborating, “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 CBUAE and RBI. CBUAE and RBI will jointly conduct proof-of-concept (PoC) and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade.” 

India began its digital rupee pilot in November last year for the wholesale sector, and in December for the retail sector. RBI Executive Director Ajay Kumar Choudhary stated earlier this month that the country’s CBDC will act as an alternative to cryptocurrency.

The MoU also provides for technical collaboration and knowledge sharing on matters related to fintech and financial products and services.

The RBI concluded, “This bilateral engagement of testing cross-border use case of CBDCs is expected to reduce costs, increase the efficiency of cross-border transactions, and further the economic ties between India and UAE.”