The Central Bank of the United Arab Emirates (CBUAE) has announced its intention to complete the first phase of the Central Bank Digital Currency (CBDC) within the next 12 to 15 months, which will be mid-2024. In addition to the pilot launch of a central digital currency named “Digital Dirham”, it also includes a bilateral link with a country.
On Thursday, the UAE Central Bank announced a three-phase Central Bank Digital Currency (CBDC) strategy to facilitate the introduction of the digital dirham. In the first phase, “Ambridge” was launched in collaboration with the Bank for International Settlements and central banks in the United Arab Emirates, China, Hong Kong and Thailand. It aims to facilitate cross-border transactions in centralized digital currencies with real value for settlement of international trade.
For the second pillar, the UAE’s central bank will develop a proof of concept for basic bilateral centralized digital currency common bridges with India, one of the UAE’s most important trading partners. For the third pillar, the UAE regulator will work on a basic concept guide to provide local centralization covering wholesale and retail applications.
In addition, the Central Bank of Abu Dhabi revealed its partnership with local cloud services company G42 Cloud. and R3, a New York-based blockchain technology company. They were respectively designated as infrastructure and technology providers for the implementation of centralized digital currencies.
Khaled Mohamed Balami, Governor of the Central Bank of the United Arab Emirates, said: Central Bank Digital Currency (CBDC) is one of the initiatives included in the UAE Central Bank’s ‘FIT’ programme, which will help strengthen the UAE’s leading global financial position. Center.”
He added, “The launch of our centralized digital currency strategy is a key step in the evolution of money and payments in the country. The central bank digital currency will accelerate our journey to digital transformation and promote financial inclusion. We will explore the opportunities a centralized digital currency offers to the economy and society.”
The priority of the UAE Central Bank is the digital dirham
The UAE Central Bank has prioritized the issuance of the digital dirham in the 2023-2026 timeframe. However, it is not the only monetary authority in the region to prioritize CBDC. Where a central bank counterpart in Saudi Arabia is working on the same project. And a partnership agreement was signed earlier between them in this field. As a reminder, the Central Bank of Saudi Arabia and the Central Bank of the United Arab Emirates announced the success of the “Aber” program for central bank testing in 2019. The digital currency aims to explore the extent to which distributed ledger technology (blockchain) can be used to facilitate cross-border financial payments.
The two central banks launched the “Aber” project initiative with the aim of proving the principle of issuing a central bank digital currency (CBDC). Experience using distributed ledger technology through actual application. Dealing directly with these technologies to enable financial transfers between banks in both countries, guaranteeing a reduction in processing time and cost, by providing two central banks with a fully enclosed digital currency. Saudi Central Bank (SAMA) and UAE Central Bank.
Also, public policies for cryptocurrency in the UAE are very advanced. Earlier, Dubai set up a dedicated cryptocurrency regulatory body. It has already released many regulations and laws related to working in the crypto digital currency industry.
This has prompted many global cryptocurrency digital companies to set up bases in the city. Ras Al-Khaimah (RAK), one of the country’s emirates, is working to establish the first free economic zone entirely dedicated to virtual assets and digital businesses.
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