The Central Bank of UAE (CBUAE) has announced the implementation of its Central Bank Digital Currency (CBDC) Strategy, one of the nine initiatives under the CBUAE’s Financial Infrastructure Transformation (FIT) Programme. A signing ceremony was jointly held by CBUAE, G42 Cloud and R3 to mark the occasion.

G42 Cloud and R3 will serve as the infrastructure and technology providers, respectively, for the CBDC implementation. The CBUAE has already undertaken several successful CBDC initiatives, including Project “Aber” with the Saudi Central Bank in 2020, which was awarded the Global Impact Award by Central Banking Magazine, and the first real-value cross-border CBDC pilot under the “mBridge” Project with the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China and the Bank for International Settlements in 2022.

The first phase of CBUAE’s CBDC Strategy is expected to complete over the next 12 to 15 months and comprises three major pillars. These include the soft launch of mBridge to facilitate real-value cross-border CBDC transactions for international trade settlement, proof-of-concept work for bilateral CBDC bridges with India, and proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage.

CBDC is a risk-free form of digital money issued and guaranteed by the central bank, serving as a secure, cost-effective and efficient form of payment and a store of value. As part of the UAE’s digital transformation, CBDC will help address the pain points of domestic and cross-border payments, enhance financial inclusion, and support the move towards a cashless society.

CBDC is also expected to further strengthen the UAE’s payment infrastructure, providing additional robust payment channels and ensuring a resilient and reliable financial system. The CBUAE aims to ensure the readiness of the UAE to integrate the payment infrastructures with the future potential tokenisation world, the tokenisation of financial and non-financial activities.

Khaled Mohamed Balama, the Governor of the CBUAE, said, “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. The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country. CBDC will accelerate our digitalisation journey and promote financial inclusion. We look forward to exploring the opportunities that CBDC will bring to the wider economy and society.”

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This article was republished from azcoinnews.com