UAE Central Bank Issues Digital Dirham Strategy
The Central Bank of the UAE has launched the CBUAE Central Bank Digital Currency (CBDC) Strategy, one of the nine initiatives of the CBUAE’s Financial Infrastructure Transformation (FIT) Programme, it said on Thursday (March 23). The CBUAE has engaged with G42 Cloud and R3 as the infrastructure and technology providers respectively for its CBDC implementation.
CBDC is a risk-free form of digital money issued and guaranteed by the central bank and serves as a secure, cost-effective and efficient form of payment and a store of value. As part of the UAE’s digital transformation, CBDC will address the challenges of domestic and cross-border payments, enhance financial inclusion and the move towards a cashless society.
“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,” said Khaled Mohamed Balama, the Governor of the CBUAE. “The lauch of our CBDC strategy marks a key step in the evolution of money and payments in the country.”
The first phase of the strategy, which is expected to complete over the next 12 to 15 months, comprises three major pillars, the soft launch of mBridge to facilitate real-value cross-border CBDC transactions for international trade settlement; proof-of-concept work for bilateral CBDC bridges with India; and proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage. The implication is that the new digital Dirham will be available for public use from about 2025.
China, Russia and India have already begun trialling the Digital RMB, Digital Ruble, and Digital Rupee.
With the launch of the new strategy, CBUAE aims to strengthen the UAE’s payment infrastructure, providing additional robust payment channels, ensuring a resilient and reliable financial system. More importantly, ensure the readiness of the UAE to integrate the payment infrastructures with the future potential tokenization world, the tokenization of financial and non-financial activities.
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