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The UAE's Central Bank Announces Plans for a New Digital Dirham

To officially launch the implementation of the CBUAE Central Bank Digital Currency (CBDC) Strategy, one of the nine initiatives of the CBUAE's Financial Infrastructure Transformation (FIT) Programme, the Central Bank of the UAE (CBUAE) staged a signing ceremony in collaboration with G42 Cloud and R3.
For its CBDC deployment, the CBUAE has contracted with G42 Cloud and R3 as the infrastructure and technology suppliers, respectively.

Following the launch of several successful CBDC projects, such as Project "Aber" with the Saudi Central Bank in 2020, which proved that it was possible to settle cross-border payments using a digital currency issued by two central banks and received the Global Impact Award from Central Banking Magazine, as well as the noteworthy achievement of the first real-value cross-border CBDC pilot under the "mBridge" Project with the Hong Kong Monetary Authority, the Bank of Thai has announced the launch of its CBDC platform.

The first phase of CBUAE's CBDC Strategy, which is anticipated to be completed within the next 12 to 15 months, is divided into three main pillars: the soft launch of mBridge to enable real-value cross-border CBDC transactions for the settlement of international trade; proof-of-concept work for bilateral CBDC bridges with India, one of the UAE's top trading partners; and finally, proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage.

CBDC is a risk-free digital currency that the central bank has issued and guaranteed. It can be used as a store of value as well as a safe, affordable, and effective method of payment.
CBDC will aid in addressing the challenges associated with domestic and international payments, promoting financial inclusion, and advancing the UAE's digital transformation.

More crucially, the CBUAE wants to make sure that the UAE is prepared to connect its payment infrastructure with a future in which both financial and non-financial activity may be tokenized.
"CBDC is one of the initiatives as part of the CBUAE's FIT programme, which will further position and solidify the UAE as a leading global financial hub," stated H.E. Khaled Mohamed Balama, Governor of the CBUAE. 

The introduction of our CBDC plan represents an important development in the nation's monetary and payment system. CBDC will advance financial inclusion and speed up our digitalization process. We are interested in learning more about the prospects that CBDC will present for the larger economy and society.

The bank in question is demonstrating clear signs of embracing digitalization, which is encouraging for its future expansion and prosperity.

The recent hiring of a Chief Fintech Officer is one noteworthy development in this area, indicating that the bank is committed to utilizing cutting-edge technologies to enhance its products and services.

This choice demonstrates the bank's strategic vision and long-term objectives as it aims to maintain its competitiveness in a market that is becoming increasingly digital.
Paul Kayrouz's nomination as the new CFO also emphasises the bank's dedication to development and innovation.

It appears that the bank is actively modernising its operations and staying on the cutting edge of the financial sector.

With such an outlook on the future, it is conceivable that the bank will flourish going forward and satisfy the changing demands of its clients.

Editor- Sarah Fathima Ahmed

March @023, CryptoniteUae