The Central Bank of the UAE (CBUAE) will be implementing its Central Bank Digital Currency (CBDC) strategy titled ‘The Digital Dirham’.
In a joint signing ceremony with G42 Cloud and R3, CBUAE has enlisted the two entities as the infrastructure and technology providers, respectively.
They will play a key role for the Central Bank’s CBDC implementation, which is one of the nine initiatives of the CBUAE’s Financial Infrastructure Transformation (FIT) Programme.
For the first phase of the CBDC Strategy, the focus will be on three main pillars – soft launch of mBridge, proof-of-concept work for bilateral CBDC bridges with India and proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage.
mBridge will facilitate real-value cross-border CBDC transactions for international trade settlement.
The first phase will take place over the next 12 to 15 months.
According to an emailed statement by the central bank, CBDC is a risk-free form of digital money issued and guaranteed by the central bank.
It is also a secure, cost-effective, and efficient form of payment and a store of value, thus addressing the issued around domestic and cross-border payments. It will also enhance financial inclusion, and move towards a cashless society, and further strengthen the UAE’s payment infrastructure.
“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. CBDC will accelerate our digitalisation journey and promote financial inclusion. We look forward to exploring the opportunities that CBDC will bring to the wider economy and society,” CBUAE governor Khaled Mohamed Balama said.
Previously, the Central Bank has achieved several successful CBDC initiatives in recent years, including Project “Aber” with the Saudi Central Bank in 2020.
Other successful initiatives include the launch of the first real-value cross-border CBDC pilot under the ‘mBridge’ Project with the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Bank for International Settlements in 2022.