The UAE has taken a major step toward its goal of becoming a global financial hub.
The UAE Central Bank has launched its Central Bank Digital Currency Strategy, which is one of the nine steps in its program to become a leading global financial hub.
The central bank has signed a deal with R3 and G42 Cloud for the technology and infrastructure implementation of the digital dirham.
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G24 Cloud is a leading player in the artificial intelligence and cloud computing sector, while R3 is a leader in digitized financial services.
The central bank’s first major foray into CBDCs started in 2020 when it partnered with the Saudi central bank to participate in Project Aber. The project proved successful and confirmed the viability of settling cross-border transactions via a CBDC.
In 2022, the UAE central bank participated in a real-world CBDC pilot dubbed mBridge, in partnership with the Bank of Thailand, the Hong Kong Monetary Authority, the Digital Currency Institute of the People’s Bank of China, and the Bank for International Settlements.
The first phase of the current CBDC strategy will be completed in mid-2024. It will focus on three key areas. The first is a soft launch of mBridge for international trade settlement, the second is a proof-of-concept CBDC bridge with India, and the third is a proof-of-concept for domestic wholesale and retail CBDC use.
The UAE central bank aims to strengthen the country’s payment infrastructure by launching robust payment channels. Its goal is to create a reliable and resilient financial system. Additionally, it will ensure the UAE is ready for a future tokenized world for financial and non-financial activities.
To date, 119 countries are looking into launching CDBCs. Of these, 61 countries are already in the advanced stages of the launch.
