The UAE Central Bank (CBUAE) is inching closer to fully launching its central bank digital currency (CBDC)– the digital dirham for domestic and cross-border payments.
According to a March 23 release, the CBUAE has struck a deal with Abu Dhabi’s G42 Cloud and digital banking services provider R3 to be the CBDC implementation’s infrastructure and technology suppliers.
In addition to tackling domestic and cross-border payment difficulties, the central bank claims it will assist improve financial inclusion as the country strives to achieve a “cashless society.”
The first phase of the CBDC plan includes the soft launch of “mBridge,” which enables CBDC transactions for international trade, as well as proof-of-concept work for bilateral CBDC bridges with India and domestic CBDC issuance for wholesale and retail use. According to the release, this step is scheduled to be finished within the next 12-15 months.
During the initial unveiling of the strategy on Feb. 12, the CBUAE governor Khaled Mohamed Balama said:
“The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country. CBDC will accelerate our digitalization journey and promote financial inclusion.”
While the UAE Central Bank looks to push the boundaries of CBDC use cases, debates over the asset’s viability in the United States continue.
UAE Central Bank Discloses the Three Stages of Development
According to the statement, the first phase of the CBUAE’s CBDC (The Digital Dirham) would be finished over the next 12 to 15 months and will feature three primary pillars.
The first pillar is the soft launch of the continuing project mBridge, a partnership between the BIS and the central banks of Hong Kong, the Chinese mainland, the United Arab Emirates, and Thailand to examine cross-border payments and multi-CBDC transactions.
The second pillar will be proof-of-concept work for a bilateral CBDC bridge with India, and the third will be proof-of-concept work for a domestic wholesale and retail CBDC, which was initially revealed last month.
The UAE Central Bank had announced its digital dirham as one of nine key initiatives of its new Financial Infrastructure Transformation Program at a time when central banks all over the world have been working towards exploring CBDCs.