The UAE central bank said it has started implementing its digital currency strategy with its partners G42 Cloud and R3. According to the central bank, the digital currency initiative is expected to “further position and consolidate the UAE as a leading global financial center”.
CBDC strategy to focus on three pillars
The central bank of the United Arab Emirates (UAE) recently said that it will start implementing its digital currency strategy with its two partners G42 Cloud and R3. According to a report, the two partners of the UAE’s apex bank are expected to play a key role in helping the central bank implement the CBDC.
As explained in a recent Arabian Business report, the first phase of the central bank’s strategy, which is expected to unfold over 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. Proof-of-concept work for CBDC’s national issuance covering wholesale and retail usage is the third key pillar that will be considered.
Commenting on the reasons why the Central Bank of the United Arab Emirates (CBUAE) chose to pursue its CBDC initiative, the bank’s governor, Khaled Mohamed Balama, presented this as a decision that likely strengthens the country’s position as a center leading global financial institution. He also suggested that implementing the CBDC will likely promote financial inclusion.
“The CBDC is one of the initiatives under the CBUAE’s FIT (Financial Infrastructure Transformation) program, which will further position and solidify the UAE as a leading global financial center. The launch of our CBDC strategy marks a key milestone in the evolution of money and payments in the country. The CBDC will accelerate our digitization journey and drive financial inclusion. We look forward to exploring the opportunities the CBDC will bring to the broader economy and society,” the Governor said.
Prior to its latest CBDC announcement, the CBUAE has engaged in several digital currency initiatives, including its collaboration with the Central Bank of Saudi Arabia in 2020. The bank’s other initiatives include its cross-border CBDC pilot project with the Hong Kong Monetary Authority. Kong and the Bank of Thailand in 2022. The People’s Bank of China Digital Currency Institute and the Bank for International Settlements were also part of this initiative, the report adds.
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