India, UAE to explore CBDC bridge to facilitate trade, remittances without USD

The Reserve Bank of India (RBI) and Central Bank of the United Arab Emirates (UAE) announced connected March 15 that they had signed a memorandum of knowing connected collaboration and innovation successful fiscal services.

The parties volition peculiarly ore connected cardinal slope integer currency (CBDC) interoperability and volition make a proof-of-concept and aviator programme for a CBDC span to facilitate remittances and trade. Such a span would trim costs and summation ratio of transactions, they noted, and fortify economical ties.

Indian and UAE banking officials held talks successful February connected a rupee-dirham outgo strategy utilizing analogous banks. That strategy has been nether improvement for a year. The countries presently U.S. dollars to settee payments.

Walking the speech ! @RBI and UAE Central Bank signed a MoU for innovation successful fiscal products. Development and interoperability successful the tract of Central Bank Digital Currencies (CBDCs) person than ever. @DasShaktikanta @MEAIndia @Economyae @FinMinIndia @nsitharaman #FilePic pic.twitter.com/GDHC8Z9HdM

Although remittances from the Gulf portion are down 50% from 2016-2017, the UAE remains a large root of remittances to India, accounting for 17-18% of the full of astir $87 billion, arsenic of July 2022. The UAE was the apical root for India until the COVID outbreak, erstwhile it was displaced by the United States.

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India and the UAE would presumably analyse a retail CBDC to grip remittances. India presently has a home integer rupee aviator project with 50,000 users and 5,000 participating merchants. The RBI besides reported successful precocious February that it had completed astir 800,000 transactions worthy $134 cardinal with its wholesale CBDCs, and it has been investigating its CBDC’s offline functionality.

India besides recently integrated its non-blockchain unified payments interface with Singapore’s PayNow system.

The UAE launched a nine-part fiscal translation programme and announced its volition to motorboat a CBDC for home and cross-border america successful February. Even earlier that, Emirati banks had participated successful the mBridge aviator project, on with banks successful Hong Kong, China and Thailand to usage CBDC for cross-border transfers. In addition, the UAE expects cryptocurrency to “play a large relation for UAE commercialized going forward,” UAE curate of authorities for overseas commercialized Thani Al-Zeyoudi said successful January astatine the World Economic Forum.