The Central Bank of the United Arab Emirates (CBUAE) is getting closer to launching its digital currency, the digital dirham, for domestic and cross-border payments.
As announced on March 23, CBUAE signed an agreement with Abu Dhabi’s G42 Cloud and digital financial services provider R3 to be the infrastructure and technology providers for the CBDC implementation.
As well as tackling the challenges of domestic and cross-border payments, the central bank says it will also help boost financial inclusion as the country seeks to become a “cashless society.”
The first phase of the CBDC strategy consists of the soft launch of “mBridge”, which facilitates CBDC transactions for international trade, along with proof-of-concept work for bilateral CBDC bridges with India, and domestic issuance of CBDCs for use wholesaler and retailer. This phase is expected to conclude in the next 12-15 months, the statement said.
During the initial presentation of the strategy on February 12, CBUAE Governor Khaled Mohamed Balama stated:
“The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country. A CBDC will accelerate our digitization journey and promote financial inclusion.”
As the UAE looks to push the boundaries of a CBDC’s use cases, discussions continue about the feasibility of this asset in the United States.
On March 21, Republican Senator Ted Cruz introduced a bill to block the US Federal Reserve from issuing a “direct-to-consumer” CBDC for fear it could become a spy tool.
Meanwhile, A study published by a division of the US Treasury claimed that the integration of a CBDC into the economy would destabilize banks, calling the damage it could cause to banks in times of stress “significant”.
On the other hand, Nigeria is witnessing a growing adoption of its eNaira, as paper money faces severe shortages. The total number of CBDC wallets in Nigeria stands at 13 million, with a growth of more than 12 times over October 2022.
In March, 114 countries, representing more than 95% of global GDP, were exploring CBDCs. 65 nations are already in advanced stages, according to the American think tank Atlantic Council.
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