UAE launches FIT scheme to issue CBDC for cross-border payments

• New plans to introduce CBDC for domestic use and cross-border payments.
• Cryptocurrencies will play a vital role in the global trade market in the UAE.

The UAE has become a popular hub for crypto and digital innovation. Recently, the Central Bank of the United Arab Emirates (CBUAE) stated that it is working on new plans to introduce a central bank digital currency (CBDC). On February 12, the CBUAE newly launched the Financial Infrastructure Transformation (FIT) programme, which was created as part of the national ‘We UAE 2031’ vision and the National Digital Economy Strategy.

According to the CBUAE announcement, the FIT plan includes new plans to introduce CBDC for domestic use and cross-border payments. The plan aims to support the financial services industry, facilitate digital transactions and “make the UAE competitive as a financial and digital payments hub.”

Meanwhile, along with the CBDC, nine additional initiatives have been added to the plan.The first phase will focus on digital payment infrastructure and services such as issuing domestic card schemes, instant payment platforms and launching central bank digital currency For international transactions and domestic use.

The second phase of the FIT program details the establishment of the Financial Cloud, the Financial Sector Innovation Center and eKYC. “These digital infrastructures will improve compliance, reduce operating costs, enhance innovation and customer experience, and most importantly strengthen their security and operational resilience,” the CBUAE said.

Earlier on Jan. 20, Thani Al-Zeyoudi, UAE Minister of State for Foreign Trade, emphasized that cryptocurrencies will play a vital role in the country’s global trade. He said that the UAE government is working on crypto regulations to transform the Arab country into a digital hub with crypto-friendly policies.

“We started attracting some companies to the country with the intention that together we will build the right governance and legal system that is needed,” Al-Zeyoudi said.

Saudi Arabia’s national banking regulator, the Saudi Central Bank (SAMA), has discussed new plans to introduce a CBDC in its long-term goal of transitioning to a cashless country. The central bank said it will have to watch closely whether to introduce a CBDC.

In 2019, SAMA partnered with the Central Bank of the United Arab Emirates to develop a project called Project Aber on CBDC. The project focuses on how blockchain technology will help cross-border payments. It also looked at the relationship between currencies such as the Saudi riyal and the UAE dirham.

SAMA has appointed Mohsen Al Zahrani to lead the virtual assets and CBDC program in September 2022. Recently, the Saudi British Bank (SABB) used blockchain technology to strengthen the “digitalization of letters of credit”.

Andrew is a blockchain developer who developed an interest in cryptocurrencies after graduation. He’s a keen observer of detail and shares his passion for writing and being a developer.His back-end knowledge of blockchain helps him provide a unique perspective for his writing

Latest posts by Andrew Smith (view all)