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UAE central bank to issue CBDC as part of its financial transformation program

The creation of a CBDC intends to alleviate cross-border payment inefficiencies and promote innovation in domestic payments.

As the first phase of its recently established financial infrastructure transformation (FIT) program, the Central Bank of the United Arab Emirates (CBUAE) intends to introduce a central bank digital currency (CBDC) for both domestic and international use.

The CBUAE recently announced the FIT initiative and emphasized its goal of assisting the nation's financial services industry. The scheme, according to the central bank, will support digital transactions and boost the UAE's competitiveness as a centre for finance and electronic payments.

The issuing of a CBDC is part of the FIT program's initial phase. A CBDC would "address the issues and inefficiency of cross-border payments and help stimulate innovation for domestic payments, respectively," the central bank claims. The FIT program would "help a vibrant UAE financial ecosystem and its future expansion," according to Khaled Mohamed Balama, Governor of the CBUAE.

During the first stage of the initiative, the government also intends to introduce a CBDC, a unified card payment network to "promote the expansion of e-commerce," and an instant payments platform to "encourage financial inclusion and enable a cashless society."

Nine projects total, including the ones that will be carried out in the first stage, make up the FIT program. Following the initial stage, initiatives will include an innovation hub and an e-Know Your Customer platform.

February 2023, CryptoniteUae