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this united arab emirates (UAE) have expressed interest in launching central bank digital currency (CBDC) to improve its digital economy amid rapid global financial innovation.
The country’s chief banking regulator, the Central Bank of the United Arab Emirates (CBUAE), announced in a statement public statement The launch of the CBDC is part of its Financial Infrastructure Transformation Program (FIT Program). The initiative aims to “accelerate the digital transformation of the financial services industry”.
The UAE’s approach to CBDC appears to be a two-pronged approach, with the central bank focusing on both retail and wholesale products of the financial ecosystem. Under the retail version, citizens will have access to a digital version of the dirham, which will be accepted as the country’s legal tender to pay for goods and services.
From the statement, the UAE may be looking to wholesale CBDC Improve money transfers between financial institutions as it looks at cross-border functions. The timeline for launching the CBDC was not disclosed to the public, but CBUAE Governor HE Khaled Mohamed Balam confirmed that the initiatives will be fully integrated by 2026.
“CBDCs are intended for cross-border payments and domestic use to address problems and inefficiencies in cross-border payments, and to help drive innovation in domestic payments, respectively,” the CBUAE statement read.
The UAE has dabbled in CBDCs in the past, with relative success after partnering with the Bank for International Settlements (BIS) Innovation Center and the central banks of Thailand, Hong Kong and China.The experiment is named Project mBridgedescribed as the “world’s largest pilot” of a CBDC, with a focus on cross-border functionality.
UAE Financial Landscape Is it suitable?
The CBUAE statement revealed several initiatives under the FIT scheme that the government will be interested in rolling out in the coming days. The initiatives, which total nine, reinforce the central bank’s drive to “enhance monetary and financial stability and consumer protection through sound financial infrastructure and the adoption of digital technologies”.
In addition to the proposed CBDC, FIT plans also include the launch of card domestic schemes, eKYC, open finance, regulatory technology and innovation hubs. Others include a robust financial cloud, instant payments platform, and excellence and customer experience initiatives.
Dubai, an emirate in China, has long been exposed to the light new rule For its native virtual currency ecosystem and the creation of new regulatory entities.
learn more central bank digital currency and some design decisions to consider when creating and launching it, read nChain’s CBDC Playbook.
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