The United Arab Emirates is advancing its digital finance landscape with the initiation of the Central Bank Digital Currency (CBDC) Strategy, a collaborative effort involving the Central Bank of the UAE (CBUAE), G42 Cloud, and R3. This strategic move, part of the CBUAE’s Financial Infrastructure Transformation (FIT) Program, signifies a pivotal step towards integrating digital currency into the nation’s financial ecosystem.
Strategic Goals and Partnerships
Launched last Saturday, the CBDC Strategy aims to explore and implement digital currency solutions across various phases over the next 12 to 15 months. A notable milestone in this journey will be the soft launch of mBridge, a platform designed to facilitate real-value cross-border CBDC transactions, particularly focusing on international trade settlements.
Fostering International and Domestic Innovation
A significant aspect of this strategy includes establishing proof-of-concept works for bilateral CBDC bridges with key trading partners like India, emphasizing the UAE’s commitment to enhancing its role in global trade. Additionally, the strategy encompasses proof-of-concept efforts for domestic CBDC issuance, covering both wholesale and retail applications.
Vision for the Future
H.E. Khaled Mohamed Balama, the Governor of the CBUAE, highlighted the CBDC initiative as a transformative step not only for the UAE’s financial infrastructure but also for its position as a leading global financial hub. According to Governor Balama, the adoption of CBDC represents a critical advancement in the evolution of money and payments, promising to accelerate the UAE’s digitalization efforts and promote financial inclusion.
Advantages of the CBDC
The CBUAE emphasizes that the newly launched CBDC is a secure and efficient digital money form, issued and guaranteed by the central bank. It is envisioned as a cost-effective payment method and a valuable tool in addressing domestic and cross-border payment challenges, enhancing financial inclusion, and supporting the transition to a cashless society. This initiative marks a significant leap towards realizing the potential of digital currencies in fostering a more inclusive and efficient financial system.
