One of the initiatives of the UAE's Financial Infrastructure Transformation Program
«Central Bank» launches the digital currency strategy
The Central Bank signed an agreement with G42 Cloud and R3 to start implementing the strategy. WAM
The Central Bank of the UAE (CBUAE) has signed an agreement with G42 Cloud and R3 to kick off the implementation of the Central Bank's Digital Dirham strategy, one of the nine initiatives of the UAE's Financial Infrastructure Transformation Program.
The bank said in a statement yesterday that G42 Cloud has been selected to provide infrastructure services for the project, while R3 will provide technological services.
These partnerships follow the success of central banks' digital currency initiatives, including the "Aber" project with the Saudi Central Bank, during 2020, whose results confirmed the possibility of using the digital currency issued by the two central banks to settle cross-border payments, and the project won the "Global Impact Award 2021" granted by Central Banking magazine.
Another of these initiatives is the trial operation of the "Bridge" project for cross-border central banks' digital currencies, in cooperation 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, through which real value financial transactions were completed.
These initiatives have contributed to the Central Bank's readiness to implement its digital currency strategy.
The first phase of the Central Bank's digital currency strategy, which is expected to be completed within the next 12 to 15 months, includes three main pillars: the pilot launch of the bridge platform to facilitate cross-border cryptocurrency financial transactions and settle international trade payments, in addition to bilateral cooperation on the proof of the concept of central digital currencies with India, as well as work to prove the concept of digital currency to central banks to issue a digital currency for the use of individuals, companies and institutions in the UAE.
As part of the UAE's transformation into a digital economy, the Central Bank's digital currency will contribute to alleviating the current challenges in domestic and cross-border payments, achieving financial inclusion and achieving a cashless society, and will contribute to strengthening the UAE's payments infrastructure and providing robust additional channels for domestic and international payments, ensuring a flexible and reliable financial system.
In addition, the Central Bank is working on the UAE's readiness to integrate its payment infrastructure with tokenisation, which includes the encryption of financial and non-financial activities.
The Governor of the Central Bank of the UAE, Khalid Mohammed Salem Balama Al Tamimi, said that the Central Bank Digital Currency Initiative is part of the financial infrastructure transformation program, which will consolidate the UAE's leading position as a global financial center.
He pointed out that "the launch of the Central Bank's digital currency strategy embodies the development of the money and payments system in the country, as its implementation aims to accelerate the pace of transformation towards a digital economy and enhance financial inclusion," adding: "We look forward to seeing the opportunities that the Central Bank's digital currency will bring to our economy and society."
The first phase of the strategy is expected to be completed within the next 12 to 15 months.
Central bank digital currency issued and backed by the central bank is a form of risk-free and stored digital money that is a safer and faster way to make cross-border payments, at a lower cost.