Central Bank launches the digital currency strategy for central banks "Digital Dirham"

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 Currency Strategy, one of the nine initiatives of the UAE's Financial Infrastructure Transformation Program. G42 Cloud has been selected to provide infrastructure services for the project, while R3 will provide technology services.

These partnerships follow the success of CBDC initiatives, including the Aber project with the Saudi Central Bank in 2020, the results of which confirmed the possibility of using CBDC to settle cross-border payments, and the project received the Global Impact Award 2021 by Central Banking magazine. In addition to the trial operation of the "Bridge" project for cross-border central banks 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, bilateral cooperation on the proof of the concept of central digital currencies with the Republic of India, which is the largest trading partner of the UAE, in addition to working on proving the concept of digital currency to central banks to issue a digital currency for the use of individuals and companies. and institutions in the UAE.

Central bank issuing and backed digital currency is a form of risk-free and value-stored digital money, and is a safer and faster way to make cross-border payments at a lower cost. As part of the UAE's transformation into a digital economy, the Central Bank's digital currency will contribute to alleviating current challenges in domestic and cross-border payments, achieving financial inclusion and access to a cashless society, 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 encoding of financial and non-financial activities.

H.E. Khalid Mohamed Balama, Governor of the Central Bank, said: "The CBUAE Digital Currency Initiative is part of the Financial Infrastructure Transformation Program that will consolidate the UAE's leading position as a global financial hub. We look forward to seeing the opportunities that the central bank's digital currency will bring to our economy and society."
More details and updates will be announced in due course.