The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates have recently agreed to collaborate in the realm of cross-border money transfers, utilizing stablecoins backed by their respective governments.
The central banks plan to conduct proof of concept (PoC) trials for payments and settlements using CBDC, while exchanging technical knowledge on fintech-related matters.
The RBI believes that exploring bilateral partnerships for central bank digital currencies will encourage innovation in financial products and services and reduce costs for international transactions.
This partnership aims to enhance economic ties between India and the UAE. Furthermore, in 2022, India and the UAE signed another agreement to jointly research blockchain and artificial intelligence (AI).
In November of the previous year, RBI initiated a pilot project to experiment with the wholesale digital rupee, followed by the retail version in December.
The CEO of RBI, Ajay Kumar Choudhary, has stated that the digital rupee will coexist with the state currency and function as an alternative to cryptocurrencies.
It is worth noting that local merchants have already begun accepting digital rupee as payment, including the major Indian retail chain Reliance Retail.