The Central Bank of the United Arab Emirates (CBUAE) has released its CBDC strategy. R3 and G42 Cloud have been chosen as the infrastructure and technology providers, with the first phase of the CBDC implementation expected to be completed within the next 15 months.
The UAE commences CBDC implementation
The UAE has officially entered the implementation phase of its central bank digital currency (CBDC) project, following a successful signing ceremony with R3 and G42 Cloud in the region on March 23.
Per a document by the central bank, the CBDC is one of the nine initiatives of CBUAE’s financial infrastructure transformation (FIT) program. The central bank says its CBDC implementation comes after several successful initiatives, including Project Aber, a joint CBDC experiment with the Saudi apex bank.
The CBUAE has engaged R3 and G42 Cloud to function as the technology and infrastructure providers of its CBDC.
The first phase of CBUAE’s CBDC strategy comprises three main parts: the launch of mBridge for real-value cross-border payments processing and trade settlements, proof-of-work concept pilot for bilateral CBDC bridges with India and proof-of-concept for local CBDC issuance for wholesale and retail transactions.
If all goes as planned, the first phase of CBUAE’s CBDC implementation strategy will be completed within the next 12 to 15 months.
Fostering financial inclusion
The CBDC launch is part of the UAE’s digital transformation and the central bank expects it to eliminate the pain points in domestic and cross-border payments, foster financial inclusion, and ultimately transform the region into a cashless city.
Buoyed by the success of bitcoin (BTC) and other cryptocurrencies over the years, more than 100 central banks across the world are now at various stages of their CBDC journeys.
Despite the increasing acceptance of CBDC by apex banks, mixed reactions still trail their development. On March 20, Ron DeSantis, the Governor of Florida voiced his concerns over the possible adverse effects of CBDCs, hinting at plans to ban its use in the state.