RBI and ECB sign landmark pact to boost global financial cooperation

New Delhi: The Reserve Bank of India and the European Central Bank have signed a landmark Memorandum of Understanding (MoU) aimed at strengthening cooperation in central banking and enhancing financial stability between India and the euro area.

The agreement was signed by RBI Governor Sanjay Malhotra and ECB President Christine Lagarde, marking an updated framework to replace an earlier arrangement established in 2015.

The MoU provides for structured engagement between the two institutions, including regular policy dialogue, information sharing and technical cooperation in areas of mutual interest.

“Sustaining global cooperation is important,” says ECB chief

ECB President Christine Lagarde highlighted the importance of continued international coordination between central banks amid global economic uncertainties.

“It is important that we sustain global cooperation, and I am pleased to sign this MoU together with Governor Malhotra as a sign of our continued dialogue with the Reserve Bank of India,” Lagarde said.

The agreement reflects a broader effort by global central banks to align regulatory approaches and improve financial system resilience.

Updated framework replaces 2015 agreement

The new MoU updates an earlier agreement signed in 2015 and expands the scope of cooperation between the two institutions.

It focuses on enhancing communication channels, improving regulatory understanding, and strengthening collaboration in emerging financial challenges, including cross-border financial flows and market stability issues.

Officials said the updated framework is intended to make cooperation more structured and responsive to current global financial conditions.

Separately, the Reserve Bank of India has issued new Foreign Exchange Management (Authorised Persons) Regulations, 2026, aimed at streamlining the approval and renewal process for entities dealing in foreign exchange.

The revised framework extends the “principal-agent model,” allowing authorised entities such as banks and forex dealers to appoint agents to provide foreign exchange services more widely.

The RBI said the changes are designed to improve access to forex services while maintaining strong regulatory oversight.

What authorised persons and agents mean

Authorised persons are entities approved by the RBI to offer foreign exchange services, including currency exchange, remittances and overseas payments.

Under the principal-agent model, these authorised entities can appoint agents to deliver certain services to customers, expanding accessibility while keeping compliance safeguards in place.

The central bank emphasised that despite simplification, “appropriate checks and balances” will remain to ensure financial integrity and regulatory control.

The RBI–ECB agreement comes at a time when global financial institutions are increasingly focusing on cooperation to manage volatility in currency markets, inflation pressures and cross-border capital flows.

The collaboration is expected to support smoother regulatory alignment and enhance stability across interconnected financial systems in Europe and Asia.
(With PTI inputs)