Over the weekend this past weekend, last weekend the Reserve Bank of India (RBI) as well as the Central Bank of United Arab Emirates (CBUAE) agreed to sign two memoranda of understanding. The initial MoU focused on establishing guidelines to facilitate usage of regional currency, i.e., the Indian rupee (INR) as well as the UAE dirham (AED) to conduct cross-border trade. The second MoU focused on cooperating in the interconnection of their messaging and payment system. The MoUs represent a significant step in the direction of internationalizing INR as well as the Indian Payment system.

The power of the US dollar has been challenged and numerous attempts were launched to contest its supremacy. Large European nations have renounced their currency in order to join the euro as their single currency. Initially it did appear to show promising signs, however because of the European recession and the stagnant growth following, it slowed down.

The Chinese are trying to make the renminbi appear to be an international currency, by offering loans to its customers in the currency. The Chinese as well as Europeans were among the first users of the central bank’s digital currency with a primary purpose being to improve international trade in their currencies.

The Indian officials have joined in with the idea of positioning INR as a possible alternative currency to use for international transactions. This MoU in partnership with UAE adds to the list of nations which settle transactions with INR.

Source: moneycontrol.com