The central bank in the United Arab Emirates said it has started implementing its digital currency strategy with partners G42 Cloud and R3. According to the central bank, the digital currency initiative is expected to “further position and solidify the UAE as a leading global financial hub.”
CBDC Strategy to Focus on Three Pillars
The United Arab Emirates (UAE) central bank recently said it would start implementing its digital currency strategy with its two partners G42 Cloud and R3. According to a report, the UAE’s apex bank’s two partners are expected to play a key role in helping the central bank achieve CBDC implementation.
As explained in a recent Arabian Business report, the first phase of the central bank’s strategy, which is expected to take place in the next 12 to 15 months, will focus on three key pillars. The proof-of-concept work for bilateral central bank digital currency (CBDC) bridges with India, as well as the soft launch of the M-bridge, are two of the key pillars. The proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage is the third key pillar that will be considered.
Commenting on why the Central Bank UAE (CBUAE) has chosen to proceed with its CBDC initiative, the bank’s governor Khaled Mohamed Balama touted this as a move that likely bolsters the country’s position as a leading global financial hub. He also suggested the implementation of the CBDC will likely promote financial inclusion.
“CBDC is one of the initiatives as part of the CBUAE’s FIT [Financial Infrastructure Transformation] 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,” the governor said.
Prior to its latest CBDC announcement, the CBUAE engaged in several digital currency initiatives including its collaboration with the Saudi Central Bank in 2020. The bank’s other initiatives include its cross-border CBDC pilot with the Hong Kong Monetary Authority and the Bank of Thailand in 2022. The Digital Currency Institute of the People’s Bank of China, and the Bank for International Settlements were also part of this initiative, the report added.