On Thursday, March 23, the Central Bank of the UAE launched its Central Bank Digital Currency [CBDC] strategy called “The Digital Dirham.” The CBUAE has joined hands with G42 Cloud and R3, as the infrastructure and technology providers for its digital currency program.
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The bank newly launched a Financial Infrastructure Transformation [FIT] program. As reported last month, the initiative intends to enhance the pace of digital transformation of the financial services sector. It will do so by promoting digital transactions and encouraging innovation in the ecosystem. This is expected to sharpen UAE’s prospects to become the financial and digital payment hub.
UAE’s CBDC initiative: A ‘key step’ in its monetary evolution
Specifically, the program entails nine initiatives, and launching a Central Bank Digital Currency is one among them. The digital currency will help in addressing the challenges pertaining to domestic and cross-border payments. Additionally, it will help enhance financial inclusion and aid the UAE’s move towards a cashless society. Elaborating on the same, Khaled Mohamed Balama, the Governor of the CBUAE reportedly said,
“CBDC is one of the initiatives as part of the CBUAE’s FIT programme, which will further position and solidify the UAE as a leading global financial hub. The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country.”
Furthermore, he added,
“CBDC will accelerate our digitalization journey and promote financial inclusion. We look forward to exploring the opportunities that CBDC will bring to the wider economy and society.”
According to reports from Gulf News and Arabian Business, the first phase of the strategy encapsulates three major pillars. The first involves the soft launch of “mBridge” to facilitate real-value cross-border CBDC transactions for international trade remittances.
The second major focus will be on the proof-of-concept work for bilateral CBDC bridges with India. Finally, the strategy will also cater to the proof-of-concept work for domestic CBDC issuance, encompassing both wholesale and retail usage. In all, the first phase is expected to roughly wind up within the next 12 to 15 months.
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