The Central Bank of the United Arab Emirates (CBUAE) is gearing up to launch the initial phase of its central bank digital currency (CBDC) strategy, which will cover both retail and wholesale applications.
On March 23, the CBUAE officially commenced the new strategy by signing an agreement with R3 and G42 Cloud, a subsidiary of the UAE-based AI holding company G42. R3 will be responsible for developing the infrastructure for the digital dirham, while G42 Cloud will provide the necessary technology.
The first phase of the strategy consists of three key components. Firstly, it involves the soft launch of Project mBridge, followed by a proof-of-concept for a bilateral CBDC bridge with India, one of the UAE’s primary trading partners. Lastly, the strategy includes a proof-of-concept for a domestic CBDC designed for both wholesale and retail use. In a statement, the CBUAE emphasized that the CBDC strategy is an integral part of its broader Financial Infrastructure Transformation Programme.
The CBUAE is an original participant in Project mBridge, which is touted as the “first real-value cross-border CBDC pilot.” The bank also highlighted the success of Project Aber, a previous initiative carried out in collaboration with the Saudi Central Bank.
Professional services firm EY revealed that the CBUAE is actively encouraging all commercial banks and payment processors in the country to take part in a pilot integration with the CBUAE node for issuing the Digital Dirham. Additionally, the regulator has mandated that all UAE licensed financial institutions (LFI) adopt the Digital Dirham by 2026.
The agreements with R3 and Abu Dhabi-based G42 were officially announced in March 2023. At that time, it was estimated that the implementation of the strategy would require 12 to 15 months.
G42 also entered into a partnership with OpenAI in October, with the aim of collaborating on various projects in the financial services, energy, healthcare, and public services sectors.
R3, a prominent developer of CBDC technology, is recognized as the provider of the Corda permissioned blockchain. The company has been involved in numerous initiatives led by the Bank for International Settlements and other organizations.
Source: John Kiff
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