The Central Bank of the United Arab Emirates (CBUAE) is close to launching its entire Central Bank Digital Currency ( CBDC ) – the digital dirham – for domestic and cross-border payments.
According to an announcement on March 23, the UAE Central Bank has signed an agreement with Abu Dhabi-based cloud service provider G42 and digital finance service R3 to act as infrastructure and technology providers for CBDC implementations .
In addition to addressing domestic and cross-border payments challenges, the central bank says it will also help promote financial inclusion as the country looks to become a “cashless society”.
The first phase of the CBDC strategy consists of the soft launch of “mBridge”, which facilitates CBDC transactions for international trade, along with a proof-of-concept of bilateral CBDC bridges with India, and issuance of domestic CBDC for wholesale and retail use. The announcement said that this phase is expected to be completed within the next 12-15 months.
During the initial unveiling of the strategy on February 12, UAE Central Bank Governor Khaled Mohammed Balama said:
THE LAUNCH OF OUR CENTRAL BANK DIGITAL CURRENCY STRATEGY REPRESENTS AN ESSENTIAL STEP IN THE EVOLUTION OF MONEY AND PAYMENTS IN THE COUNTRY. CBDCS WILL ACCELERATE OUR DIGITIZATION JOURNEY AND ADVANCE FINANCIAL INCLUSION. “
As the UAE looks to push the boundaries of CBDC use cases, discussions continue about the feasibility of the asset in the US, according to research at the Atlantic Council.