The news came from the Central Bank of the United Arab Emirates (CBUAE) on Saturday, and it said that the UAE is now preparing a CBDC for both retail and wholesale usage.
The central bank officially began the process of implementing the digital dirham on March 23 during a signing ceremony with R3 and G42 Cloud, the businesses responsible for providing the technology and infrastructure for the digital currency.
Numerous initiatives at the Bank of International Settlements (BIS) have included R3, a prominent CBDC tech developer. In October, G42, an AI holding company, and OpenAI, a financial services technology business, reached an agreement to collaborate on G42 Cloud.
According to the CBUAE’s weekend statement, “CBDC will assist in solving the pain points of domestic and cross-border payments, increasing financial inclusion, and the trend towards a cashless society,” all part of the UAE’s digital transformation.
The UAE CBDC implementation is part of the CBUAE’s Financial Infrastructure Transformation (FIT) Program, which consists of nine activities. Additionally, it has three “pillars” that will be built over the following twelve to fifteen months.
First, the bank will be able to assist with real-time cross-border transactions to settle international deals with the preliminary launch of mBridge. Using mBridge, the central bank sent $13.6 million in digital dirham and digital yuan to China last month, making it the first cross-border transaction of its kind.
Following that, the bank will launch proof-of-concept efforts for CBDC bridges with India, whose Reserve Bank is using cutting-edge technology to protect the confidentiality of its own emerging CBDC. Lastly, the bank will start working on proof of concept for domestic use cases of CBDC, such as wholesale and retail payments.
In addition to enhancing the country’s payment infrastructure, CBUAE asserts that it will set the nation up for a future when ordinary people use blockchain-based tokens for both financial and non-financial transactions—a scenario known as a “tokenized” society.
The governor of CBUAE, H.E. Khaled Mohamed Balama, spoke about how CBDC would help speed up the digitization process and increase access to financial services. “The possibilities that CBDC presents to society and the economy at large are something we are eager to investigate.”
Building digital asset infrastructure in the UAE was the goal of a $250 million joint venture that Bridge Tower Capital and Deus X announced last month. Across the Middle East, the company known as BridgeTower is working to increase institutional use of cryptocurrency.
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