The United Arab Emirates Central Bank (CBUAE) is getting ready to launch the first part of its central bank digital currency (CBDC) strategy. It examines CBDC for usage in both retail and wholesale markets.
The CBUAE launched the new approach on March 23 with a signing ceremony featuring R3 and G42 Cloud, a division of the G42 AI holding company based in the United Arab Emirates. The technology for the digital dirham will be provided by G42 Cloud, while R3 will handle the infrastructure.
The plan will consist of three parts in its initial phase. It aims for Project mBridge’s soft launch, or limited release. One of the UAE’s main trading partners, India, will be the subject of a proof-of-concept study for a bilateral CBDC bridge. The proof-of-concept for a domestic CBDC intended for both retail and wholesale use comes in third. As per an official statement issued by CBUAE:
“CBDC will help address the pain points of domestic and cross-border payments, enhance financial inclusion and the move towards a cashless society.”
The CBDC plan is a component of the wider Financial Infrastructure Transformation Program of the CBUAE.
One of the founding members of Project mBridge, dubbed the “first real-value cross-border CBDC pilot,” is the CBUAE. It also mentioned Project Aber as an effective effort that came before the new approach, carried out in collaboration with the Saudi Central Bank.
According to international professional services firm EY, the CBUAE is “is encouraging all commercial banks and payments processors in the country to participate in a pilot integration with the CBUAE node for issuing Digital Dirham; the regulator has also decreed Digital Dirham adoption by all UAE licensed financial institutions (LFI) by 2026.”
In March 2023, the deals with R3 and G42, based in Abu Dhabi, were revealed. It was anticipated at the time that the approach would take 12 to 15 months to implement.
In October, G42 and OpenAI signed an agreement to collaborate on financial services, energy, healthcare, and public services.
One of the main producers of CBDC technology is R3. It is the company that offers the permissioned blockchain Corda. It has participated in multiple projects with the Bank for International Settlements in addition to others.