UAE Central Bank Initiates Digital Dirham Strategy

UAE Central Bank Initiates Digital Dirham Strategy

The Central Bank of the United Arab Emirates (CBUAE) has officially begun the first phase of its central bank digital currency (CBDC) strategy, aiming to integrate a digital dirham into both retail and wholesale markets. This ambitious move is part of the broader Financial Infrastructure Transformation Programme, which seeks to bolster the efficiency of payment systems and foster financial inclusion within the UAE.

In partnership with blockchain technology firm R3 and G42 Cloud, part of the artificial intelligence conglomerate G42, the CBUAE is launching Project mBridge—a proof of concept for a CBDC bilateral bridge with India—and developing domestic CBDC applications. These initiatives are geared towards enhancing cross-border payments, advancing towards a cashless society, and solidifying the UAE’s commitment to digital currency adoption.

The strategic partnership, announced during a signing event on March 23, is a clear indication of the UAE’s commitment to becoming a leader in the global digital economy. The collaboration with R3 and G42 Cloud is set to provide the necessary technological foundation for the successful implementation of the digital dirham.

Embedded within the UAE’s Financial Infrastructure Transformation Programme, the CBDC strategy not only aims to improve domestic and international payment efficiencies but also mandates that all UAE-licensed financial institutions integrate the Digital Dirham by 2026. Projects such as mBridge and Project Aber, in collaboration with the Saudi Central Bank, highlight the CBUAE’s pioneering role in exploring digital currencies.

The projected 12 to 15-month implementation period for these initiatives will pave the way for the digital dirham’s integration into the UAE’s financial ecosystem. This strategic move is expected to enhance the nation’s position as a forward-thinking leader in the global digital economy, aligning with its goals to address payment challenges and promote a transition towards digital financial services.

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