The Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) have signed a Memorandum of Understanding that aims to enhance cooperation and innovation in financial products and services. As part of this agreement, both Central Banks will jointly run a pilot program on Central Bank Digital Currency (CBDC). CBDCs are a type of digital currency that is issued by a country's central bank. They are similar to cryptocurrencies, except their value is fixed by the Central Bank and equivalent to the country's fiat currency. Proof-of-concept (PoC) and pilot projects of digital currencies will be carried out jointly to facilitate cross-border CBDC transactions of remittances and trade. It is anticipated that this bilateral CBDC bridge will help in increasing the efficiency of cross-border transactions as well as reduce the overall transaction cost.