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UAE unveils strategy for CBDC implementation

The introduction of CBDCs can accelerate the digitization of payments, make transactions more efficient, and open up new opportunities for residents and businesses.

Date: 2024-03-26 Author: Marek Stiller
UAE unveils strategy for CBDC implementation

The United Arab Emirates (UAE) is currently preparing a central bank digital currency ( CBDC) for retail and wholesale use, according to a Saturday announcement by the Central Bank of the UAE (CBUAE).

The national bank launched its digital dirham implementation strategy on March 23 with the participation of R3 and G42 Cloud, the companies that will serve as infrastructure and technology providers for the digital currency.

Implementing CBDC in the United Arab Emirates

R3 has been involved in a number of Bank for International Settlements (BIS) projects, and is a major developer of CBDC technology. Meanwhile, AI holding company G42, which entered into an agreement in October to work with OpenAI on financial services technology, consists of G42 Cloud.

A weekend statement from CBUAE said: “As part of the UAE’s digital transformation, CBDC will help solve domestic and cross-border payment issues, increase financial inclusion and move toward a cashless society.”

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One of the nine initiatives under CBUAE’s Financial Infrastructure Transformation (FIT) program is to begin implementing CBDC in the United Arab Emirates. It also includes three “pillars” to be built over the next twelve to fourteen months.

First, the easy launch of mBridge allows banks to settle international transactions by executing cross-border transactions in real time. Last month, the central bank executed its first cross-border transaction through mBridge, using a digital dirham and Chinese digital yuan worth $13.6 million.

Next, the Reserve Bank will begin verifying the CBDC bridge concept in India. The Reserve Bank is applying technological advances to protect developing CBDCs. Finally, the bank will begin verifying CBDC use cases across the country, including retail and wholesale payments.

Why the CBUAE wants a digital dirham

In addition to strengthening the country’s payment infrastructure, CBUAE says it will prepare the country for a potential “tokenized” world in the future, in which ordinary people interact with blockchain-based tokens for financial and non-financial purposes.

“The CBDC will accelerate our journey to digitization and promote financial inclusion,” said CBUAE Governor H.E. Khaled Mohamed Balama. “We look forward to exploring the opportunities CBDC will bring to the broader economy and society.”

Last month, Bridge Tower Capital and Deus X launched a $250 million joint venture to build a digital content infrastructure in the UAE. The BridgeTower Middle East venture promotes institutional adoption of cryptocurrencies across the region.

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Marek Stiller
Marek Stiller
Founder of the "Cryptocurrency for Beginners" channel on YouTube. He collaborates with Łukasz to form the Arena Trading group, while at the same time being passionate about blockchain technology. His knowledge and experience in the cryptocurrency industry help beginner investors better understand this dynamic market.
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