The Reserve Bank of India (RBI) and the UAE central bank on Wednesday signed an agreement to enhance co-operation in various areas, including exploring the interoperability of digital currencies. Under the MoU (memorandum of understanding), the two central banks will collaborate on various emerging areas of fintech, especially Central Bank Digital Currencies (CBDCs), and explore interoperability between the digital currency of CBUAE and the RBI.

According to the statement, the CBUAE and the RBI will jointly conduct proof-of-concept and pilot (s) of the bilateral CBDC bridge to facilitate cross-border transactions of remittances and trade. This bilateral engagement of testing cross-border use cases of CBDCs is expected to reduce costs, increase the efficiency of cross-border transactions and further the economic ties between India and UAE, it added.

Russia payments

Indian companies are using the SWIFT global payment system to settle dollar payments with Russia, a top trade official said on Wednesday, even though many Russian banks are blocked from the network due to Western sanctions. The West blocked access to SWIFT for several Russian banks, including Sberbank and VTB, soon after Moscow invaded Ukraine in February last year to target Russian trade, making it harder for Russian companies to do business.

SWIFT underpins financial transactions globally. “We are using SWIFT for dollar payments,” the official, who did not want to be named, said when asked about the payment gateway being used for Russian payments. The official did not give more details about the banks that Indian traders were using to make the dollar payments. India’s trade and finance ministry did not immediately respond to an email requesting comment.

India’s imports from Russia have increased nearly five times in the April 2022 to February 2023 period to $41.56 billion from $8.54 billion, compared with the same period the prior year, according to government data. Last month, Reuters reported India’s Russian oil imports climbed to a record 1.4million barrels per day (bpd)in January, up 9.2 per cent from December, with Moscow still the top monthly oil seller to New Delhi, followed by Iraq and Saudi Arabia.