The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates have entered into an agreement to cooperate in the field of cross-border money transfers using government stablecoins.

Central banks will test proof of concept (PoC) for making payments and settlements using CBDC. The MoU also provides for the exchange of technical knowledge on fintech-related issues.

The RBI said that a bilateral exploration of central bank digital currencies will enable innovation in financial products and services and reduce costs in international transactions.

The initiative will strengthen economic ties between India and the UAE, the Indian central bank said. In addition, in 2022, India and the UAE signed another agreement on joint research in the field of blockchain and artificial intelligence (AI).

In November last year, RBI launched a pilot project to test the wholesale digital rupee, and in December began testing the retail one. Earlier, RBI chief executive Ajay Kumar Choudhary said that the digital rupee will be used alongside the state currency, but will act as an alternative to cryptocurrencies.

Note that the digital rupee is already beginning to be accepted for payment by local sellers. One of them was the large Indian retail chain Reliance Retail.