India, UAE to explore CBDC bridge to facilitate trade, remittances without USD

cointelegraph.com:

The Reserve Bank of India (RBI) and Central Bank of the United Arab Emirates (UAE) announced on March 15 that they had signed a memorandum of understanding on collaboration and innovation in financial services.

The parties will particularly concentrate on central bank digital currency (CBDC) interoperability and will develop a proof-of-concept and pilot program for a CBDC bridge to facilitate remittances and trade. Such a bridge would reduce costs and increase efficiency of transactions, they noted, and strengthen economic ties.

Indian and UAE banking officials held talks in February on a rupee-dirham payment system using correspondent banks. That system has been under development for a year. The countries currently U.S. dollars to settle payments.

Walking the talk ! @RBI and UAE Central Bank signed a MoU for innovation in financial products. Development and interoperability in the field of Central Bank Digital Currencies (CBDCs) closer than ever. @DasShaktikanta @MEAIndia @Economyae @FinMinIndia @nsitharaman #FilePic pic.twitter.com/GDHC8Z9HdM

Although remittances from the Gulf region are down 50% from 2016-2017, the UAE remains a major source of remittances to India, accounting for 17-18% of the total of around $87 billion, as of July 2022. The UAE was the top source for India until the COVID outbreak, when it was displaced by the United States.

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India and the UAE would presumably investigate a retail CBDC to handle remittances. India currently has a domestic digital rupee pilot project with 50,000 users and 5,000 participating merchants. The RBI also reported in late February that it had completed around 800,000 transactions worth $134 million with its wholesale