- Both retail and wholesale applications of CBDC are being considered.
- Three parts will make up the first stage of the plan as per the UAE Central Bank.
First steps toward a central bank digital currency (CBDC) strategy are being developed by the Central Bank of the United Arab Emirates (CBUAE). Both retail and wholesale applications of CBDC are being considered.
On March 23, the CBUAE and R3 and G42 Cloud, a division of the UAE-based AI holding firm G42, held a signing ceremony to launch the new strategy. The digital dirham will be powered by R3’s infrastructure and G42 Cloud’s technologies.
Strategic Approach
Three parts will make up the first stage of the plan. Also, project mBridge is planned to be launched in a restricted, or soft, manner. The second undertaking will be a demonstration of a bilateral CBDC bridge with India, a major trade partner of the UAE. The third part is a demonstration of a home CBDC that may be used for both retail and wholesale purposes. The Financial Infrastructure Transformation Programme, of which the CBDC strategy is a subset, is run by the CBUAE.
The CBUAE was an early backer of the “first real-value cross-border CBDC pilot” known as Project mBridge. Project Aber, which was carried out in collaboration with the Saudi Central Bank, was also mentioned as a successful project that came before the new approach.
The UAE regulator has mandated that all licensed financial institutions (LFI) use Digital Dirham by 2026. According to EY, the country’s commercial banks and payment processors are being encouraged to take part in a test program integration with the CBUAE node for the issuance of Digital Dirham.
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