The Central Bank of the United Arab Emirates is launching the first phase of a full-scale digital dirham implementation (CBDC), expected to be completed over the next 12-15 months.
The Central Bank of the United Arab Emirates (CBUAE) signed an agreement with cloud services provider G42 Cloud and international tech consortium R3, specializing in developing and applying blockchain in the financial system. The companies will help the CBUAE to create the infrastructure and technology for implementing the digital dirham.
The first phase of CBDC implementation has begun, including “the soft launch of mBridge” for using the digital dirham in international trade, proof-of-concept for bilateral CBDC bridges with India, and domestic CBDC issuance for wholesale and retail use. The UAE government plans to complete the first phase within 12 to 15 months.
The digital dirham will then be used for domestic and international payments, as well as to improve financial inclusion and create a “cashless society” in the country. The CBDC launch is one of nine initiatives of the financial infrastructure transformation program (FIT) proposed by the CBUAE. One of the program’s global goals is to transform the UAE into a global financial hub.
Recall that the mBridge Ledger platform was previously used successfully in a wholesale international CBDC pilot project that involved the central banks of Hong Kong, Thailand, China, and the United Arab Emirates (UAE), as well as 20 commercial banks from these regions. The project was overseen by the Bank for International Settlements (BIS). After a successful conclusion, the BIS announced the launch of Project Icebreaker to explore the use of CBDCs for retail cross-border payments. The Norwegian, Swedish, and Israeli central banks are participating in the new project.
