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RBI, UAE’s central bank sign MoUs to promote local currencies
July 17, 2023
The Reserve Bank of India and the Central Bank of UAE (CBUAE) on 15 July signed two MoUs related to the promotion of local currencies for cross-border transactions and interlinking their payment systems UPI with the Instant Payment Platform (IPP) of UAE.
According to the MoUs signed between the two central banks, both of them would now help each other in establishing a common framework for the promotion of the use of local currencies, i.e, the Indian rupee (INR) and the UAE Dirham (AED) for cross-border transactions. While the next MoU would help the banks in interlinking their payment and messaging system with UPI and IPP.
“The MoU on establishing a framework for the use of local currencies for transactions between India and UAE aims to put in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally,” the RBI press release said.
Providing more information, the RBI said that the first MoU on establishing a framework for the use of local currencies for transactions aims to put in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally.
It covers all current account transactions and permitted capital account transactions. LCSS would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-AED foreign exchange market, said the RBI, adding it would promote investments and remittances between the two countries.
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