India And UAE Collaborate To Disrupt CBDCs Development

Key Points:

• India and the UAE have signed MoU to collaborate on central bank digital currencies (CBDCs) by conducting joint pilots.
• The collaboration between India and the UAE is expected to strengthen the global financial system and promote the use of digital currencies.
• CBDCs are digital versions of fiat currencies that are backed by central banks. They offer several advantages over traditional currencies, including faster and cheaper transactions, increased transparency and security, and improved financial inclusion.

India and the United Arab Emirates (UAE) have signed a Memorandum of Understanding (MoU) to collaborate on central bank digital currencies (CBDCs) by conducting joint pilots. The announcement was made on Wednesday by the Reserve Bank of India (RBI) and the Central Bank of the UAE (CBUAE) in Abu Dhabi.

The central banks will explore the possibility of interoperability between the CBDCs of the two countries. They will also conduct proof-of-concept (PoC) and pilots for a bilateral CBDC bridge that will facilitate cross-border CBDC transactions of remittances and trade.

India has been conducting a retail CBDC pilot, which was recently extended to 15 cities, more than 50,000 customers, and 10,000 merchants. The country aims to launch a full-scale retail CBDC by the end of 2023.

The collaboration between India and the UAE is expected to strengthen the global financial system and promote the use of digital currencies. The two countries have a strong trade and economic relationship, and the partnership is expected to boost cross-border transactions between them.

CBDCs are digital versions of fiat currencies that are backed by central banks

They offer several advantages over traditional currencies, including faster and cheaper transactions, increased transparency and security, and improved financial inclusion.

Many countries are currently exploring the possibility of launching CBDCs, with China being the frontrunner in the race to develop a digital yuan. The European Central Bank (ECB) has also announced plans to launch a digital euro by 2025, while the Bank of Japan (BOJ) is currently conducting experiments to test the feasibility of a digital yen.

The collaboration between India and the UAE is a positive step towards the adoption of CBDCs in the global financial system. It is expected to pave the way for other countries to join forces in developing and testing CBDCs, leading to a more interconnected and efficient financial system.

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