RBI And ECB Strengthen Ties In Basel With New Pact Covering Policy Dialogue

The Reserve Bank of India (RBI) and the European Central Bank (ECB) signed a fresh memorandum of understanding (MoU) on 10 May 2026, replacing a decade-old cooperation framework and adding new provisions to help Indian clearing corporations gain formal recognition in European markets.

RBI Governor Sanjay Malhotra and ECB President Christine Lagarde put their signatures to the document on the sidelines of the Bank for International Settlements meetings in Basel. The new agreement replaces the earlier pact from 2015 and brings the cooperation framework in line with how both institutions have evolved since then.

What The Agreement Does

The memorandum creates a structure for the two central banks to exchange information regularly, hold policy dialogues and run technical cooperation programmes in areas where their interests overlap. Seminars, workshops and joint initiatives can all fall under the umbrella of this framework.

The provision that carries the most practical weight is the one addressing European Securities and Markets Authority recognition of Indian clearing corporations. The Clearing Corporation of India Limited and other Reserve Bank of India-regulated Central Counterparties will now have a clearer path to formal recognition by the European Securities and Markets Authority (ESMA). Without that recognition, Indian clearing houses face friction when facilitating cross-border transactions involving European counterparties.

The memorandum also sets out how the Reserve Bank of India and the European Securities and Markets Authority will work together on supervisory and regulatory matters tied to covered central counterparties.

The European Securities and Markets Authority will lean on the Reserve Bank of India's existing regulatory framework where it can, while the Reserve Bank of India keeps full responsibility for oversight of the entities under its own jurisdiction.

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Key Details

• Signed: 10 May 2026, Basel

• Signatories: RBI Governor Sanjay Malhotra and ECB President Christine Lagarde

• Replaces: 2015 memorandum of understanding

• Key addition: Path for ESMA recognition of Indian clearing corporations

• Nature: Non-binding, does not override domestic laws

• Duration: Effective indefinitely from signing date

The agreement is non-binding and does not override the domestic laws of either party. It stays in force indefinitely unless either side moves to revise or end it.

Sources:

NDTV

Fortune India