Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) have signed a Memorandum of Understanding (MoU) to enhance cooperation and jointly enable innovation in financial products and services.

Under the MoU, which was signed on Wednesday in Abu Dhabi, 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, RBI said in a statement.

‘This bilateral engagement of testing cross-border use case of CBDCs is expected to reduce costs, increase efficiency of cross border transactions and further the economic ties between India and UAE.

‘The MoU also provides for technical collaboration and knowledge sharing on matters related to Fintech and financial products and services,’ the central bank said.