India-EU Free Trade Agreement Includes Unprecedented Cooperation on Central Bank Digital Currencies

India-EU Free Trade Agreement Includes Reference to Central Bank Digital Currencies

The India-EU free trade agreement (FTA), released on February 27, includes a notable reference to cooperation on Central Bank Digital Currencies (CBDCs), highlighting the growing importance of digital currencies in international trade agreements.

According to Annex 8-C (Financial Services), Article 8-C.13 on "Cooperation and Exchange of Views on Financial Services including Financial Technology (FinTech)" outlines potential areas of collaboration, including Sup Tech, Reg Tech, Central Bank Digital Currency (CBDC), and other emerging technologies.

This inclusion is significant, as CBDCs are still evolving globally and rarely feature directly in trade agreements. India's digital rupee, issued by the Reserve Bank of India, is currently in the pilot phase, with both retail and wholesale segments under testing. The full rollout is expected to take into account global developments and cross-border use cases.

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The mention of cooperating on CBDCs signals further engagement between India and the European Union on digital currency regulation, standards, and technological development. The European Central Bank is also advancing work on a digital euro.

The Financial Services annex also encourages cooperation on electronic payments and promotes interoperability of payment infrastructures to enable real-time cross-border remittances and merchant payments.