- The Central Bank of the UAE will work with other countries to research cross-border payments.
- The country will also work on the proof-of-concept for domestic CBDC issuance covering wholesale and retail usage.
- The UAE believes that the digital dirham will allow it to become a leading global financial hub.
Countries worldwide have talked about central bank digital currencies (CDBDs) for some time. While some are reluctant to digitize their currencies, others are already launching pilot CBDC programs.
One such country is the United Arab Emirates, which has just announced its CBDC program.
UAE to Launch First Phase of CBDC by Mid-2024
The Central Bank of the UAE (CBUAE) announced on Thursday that it has launched the first phase of its digital dirham CBDC program.
The first phase consists of three major pillars. The first pillar is the soft launch of the ongoing project, called mBridge, a collaboration between the Bank for International Settlements (BIS) and the central banks of Hong Kong, the Chinese mainland, the UAE, and Thailand aimed at researching cross-border payments and multi-CBDC transactions.
The second pillar is proof-of-concept work for bilateral CBDC bridges with India. The third is proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage.
H.E. Khaled Mohamed Balama, the Governor of the CBUAE, said that the country’s CBDC initiative will “further position 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 UAE expects to complete the first phase of its CBDC program in the next 12 to 15 months.
On the Flipside
- The CBUAE has not shared any information about the second phase of its CBDC project.
Why You Should Care
CBDCs are one of the most important and hot topics in finance. While some say that introducing CBDCs will make transactions smoother, others believe that central digital currencies are incompatible with economic or political freedom.
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