UAE CBDC to Complete First Phase by 2024
The CBUAE (Central Bank of the United Arab Emirates) has revealed its strategy for introducing the UAE CBDC. The CBUAE will likely launch its digital currency by mid-2024.
On March 23, the CBUAE released an official statement regarding its strategy for the digital Dirham. The statement mentioned that the CBUAE has signed an arrangement with the R3 and G42 Cloud firms to launch its CBDC.
UAE CBDC: The three pillars of the first phase
The announcement further stated that the first stage for implementing the digital Dirham would likely be concluded in the next 12 to 15 months. The central bank has set three main pillars or goals for the first stage.
Firstly, the CBUAE is aiming for the soft launch of its pilot project, mBridge. It is a cross-border payment with several central banks and authorities. They include the Bank for International Settlements (BIS), the Bank of Thailand, the Hong Kong Monetary Authority, and the Digital Currency Institute of the People's Bank of China.
The second goal of the CBDC's first stage is to collaborate with India for virtual currency bridges. India is among the UAE's top trading allies. The two countries will work on a bilateral virtual coin bridge to facilitate trade. Meanwhile, India itself is implementing its digital Rupee.
Lastly, the Proof of Concept work will also be implemented for the domestic Dirham. It is to facilitate the wholesale and retail uses of the currency.
Financial infrastructure transformation
Introducing a digitized version of the Dirham is a key step toward financial infrastructure transformation in the country. The FIT program in the UAE is looking to catch up on the global trend of introducing CBDCs.
Many countries, including India, Russia, Iran, the UK, and others, are working on their virtual fiat currencies. Therefore, the digital currency of the UAE can be a significant step toward a transformation in the country's financial system.
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