New Delhi [India], March 18 (ANI): The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) have signed an MoU for innovation in financial products in Abu Dhabi, to enhance cooperation and jointly enable innovation in financial products and services.

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, according to an RBI statement.

The RBI on Wednesday said this bilateral engagement of testing the cross-border use case of CBDCs was expected to reduce costs, increase the efficiency of cross-border transactions and further the economic ties between India and UAE. The memorandum of understanding (MoU) also provides for technical collaboration and knowledge sharing on matters related to fintech and financial products and services.

Last month, Reserve Bank of India Deputy Governor T Sankar Rabi said eight banks participated in the central bank digital currencies project, which was launched by the central bank on February 8.

The deputy governor said the pilot project currently covers the five cities of Mumbai, New Delhi, Bengaluru, Bhubaneswar and Chandigarh. The RBI launched the first pilot of the digital rupee on December 1, 2022.

Under the Indian Presidency's theme of "One Earth, One Family, One Future", the Finance Ministers and Central Bank Governors of G20 countries, which met on February 24-25 in Bengaluru, committed to enhancing international policy cooperation and steering the global economy towards securing strong, sustainable, balanced and inclusive growth.

According to a statement -- G20 Chair's Summary and Outcome Document -- released by G20 members on February 25, the members said they would continue to explore the macro-financial implications of the potential introduction and widespread adoption of central bank digital currencies (CBDCs), and their effects on cross-border payments, as well as on the international monetary and financial system. (ANI)