India-UAE has signes a Memorandum of Understanding (MoU) on digital currency.

Indian central bank, the Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) on Thursday signed a Memorandum of Understanding (MoU).

The Mou has been signed with an aim to enhance cooperation and jointly enable innovation in financial products and services.

Under the MoU India and UAE central banks will jointly conduct pilot programmes on central bank digital currencies or CBDCs.

A press release published on the RBI website said, "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 the pilot projects of the digital currencies "to facilitate cross border CBDC transactions of remittances and trade."

According to the statement, the "bilateral CBDC bridge" is expected to aid in the reduction of costs. In addition to that, it will help "increase the efficiency of cross-border transactions and further the economic ties between India and UAE."

Moreover, it provides for technical collaboration and knowledge sharing "on matters related to Fintech and financial products and services" between UAE and India.