The Central Bank of the UAE (CBUAE) has taken a significant step to launch its Central Bank Digital Currency (CBDC) strategy titled ‘The Digital Dirham’ through a joint signing ceremony with G42 Cloud and R3. These two entities will serve as infrastructure and technology providers for CBUAE’s CBDC implementation, one of the nine initiatives of the CBUAE’s Financial Infrastructure Transformation (FIT) Programme. However, this move signals a major milestone in the UAE’s digital transformation journey.
CBDC strategy by the CBUAE
The CBUAE’s CBDC strategy focuses on three main pillars: the soft launch of mBridge, the proof-of-concept work for bilateral CBDC bridges with India, and proof-of-concept work for domestic CBDC issuance covering both wholesale and retail usage. mBridge will enable real-value cross-border CBDC transactions for international trade settlement over the next 12 to 15 months. According to an emailed statement by the central bank, using CBDC as a form of digital money issued and guaranteed by them will make payments secure, cost-effective, and more efficient. Furthermore, it will increase financial inclusion, drive progress toward a cashless society, and bolster the UAE’s payment infrastructure.
“CBDC is one of the initiatives as part of the CBUAE’s FIT program, 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 country’s evolution of money and payments. CBDC will accelerate our digitalization journey and promote financial inclusion. We look forward to exploring the opportunities CBDC will bring to the wider economy and society.”
CBUAE governor Khaled Mohamed Balama.
In recent years, the CBUAE has seen several successful CBDC initiatives. In 2020, they completed Project ‘Aber’ in collaboration with the Saudi Central Bank. In 2022, they launched the first real-value cross-border CBDC pilot program ‘mBridge’ 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.
