India and UAE to develop an interoperable CBDC between countries

India and the United Arab Emirates (UAE) have entered into a collaboration on central bank digital currencies (CBDCs), according to the official announcement published on March 15, 2023.

The press release indicates that the Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) have signed a Memorandum of Understanding (MoU) in Abu Dhabi stating that the central banks will jointly conduct a proof-of-concept (PoC) and pilot(s) of a bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade.

The objective

The primary objective of the collaboration is to explore interoperability between the CBDCs of the two nations. This step is expected to enhance the efficiency and transparency of cross-border transactions.

Notably, India has been conducting both CBDC pilots since 2022. The country is also planning to launch a full-scale CBDC (retail) by the end of 2023.

The collaboration between the two central banks on CBDCs marks a significant milestone in the adoption of digital currencies globally. It could pave the way for similar collaborations between other nations, ultimately leading to the widespread adoption of digital currencies.

Received backlash

Previously, days after the Reserve Bank of India (RBI) released its concept note on a central bank digital currency in 2022, the institution received backlash from the local crypto companies.

At the time, businesses accused the regulator of aiming to replace private digital assets with government-controlled CBDC and labeled the regulator’s move as a limited, conservative, and outdated perspective on cryptocurrencies.