The Central Bank of the United Arab Emirates (CBUAE) is getting ready to launch its central bank digital currency (CBDC) strategy, which will be implemented in phases. This strategy aims to introduce CBDC for both retail and wholesale use. To kick off the strategy, the CBUAE held a signing event on March 23 with R3 and G42 Cloud, two companies affiliated with the UAE-based AI holding company G42. R3 will provide the infrastructure for the digital dirham, while G42 Cloud will offer the necessary technology.
The first phase of the CBDC strategy consists of three components. The initial step is to have a soft or limited launch of Project mBridge. A proof-of-concept for a bilateral CBDC bridge with India, an important trading partner of the UAE, will be developed. There will be a proof-of-concept for a domestic CBDC that can be used for both wholesale and retail purposes. The CBUAE believes that CBDC will address the challenges of domestic and cross-border payments, promote financial inclusion, and contribute to the transition to a cashless society.
This CBDC strategy is part of the CBUAE’s larger Financial Infrastructure Transformation Programme. The CBUAE has been involved in previous initiatives such as Project Aber, conducted in partnership with the Saudi Central Bank, which has been successful. The CBUAE has urged all commercial banks and payment processors in the country to participate in a pilot integration with the CBUAE node for issuing the Digital Dirham. The CBUAE has mandated that all UAE licensed financial institutions adopt the Digital Dirham by 2026.
The agreements with R3 and G42 were announced in March 2023, and the implementation of the strategy was expected to take between 12 to 15 months at that time. G42 has also entered into a collaboration with OpenAI in October, focusing on various sectors such as financial services, energy, healthcare, and public services. R3, Is a prominent developer of CBDC technology and is known for its Corda permissioned blockchain platform. It has been involved in multiple projects led by the Bank for International Settlements and other organizations.
The timeline for implementing the CBDC strategy is realistic, allowing sufficient time for thorough development and testing. Patience will surely reap great rewards!
This is just another way for the government to control our money. 🚫💰