- UAE to release a CBDC and begin its first phase very shorty.
- The CBDC strategy was first unveiled in February as part of the central bank’s program to position the UAE as a global financial hub.
- In 2023 over 20 countries are taking steps to research and deploy a CBDC
The Central Bank of the UAE (CBUAE) is inching closer to fully launching its central bank digital currency (CBDC), the ‘Digital Dirham,’ for domestic and cross-border payments.
According to an announcement on March 23, the CBUAE signed an agreement with Abu Dhabi’s G42 Cloud and digital finance services provider R3 to be the infrastructure and technology providers of the CBDC implementation.
In addition to addressing the challenges of domestic and cross-border payments, it will also help boost financial inclusion as the country looks 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 trades, along with proof-of-concept works for bilateral CBDC bridges with India and domestic CBDC issuance for wholesale and retail. The announcement said this stage is expected to be completed in the next 12 to 15 months.
During the initial unveiling of the strategy on February 12, the CBUAE governor Khaled Mohamed Balama noted:
“The launch of our CBDC strategy marks a key step in the country’s evolution of money and payments. CBDC will accelerate our digitalization journey and promote financial inclusion.”
While the UAE looks to push the boundaries of CBDC use cases, debates over the asset’s viability in the United States continue.
On March 21, Republican Senator Ted Cruz introduced a bill to block the United States Federal Reserve from issuing a “direct-to-consumer” CBDC over fears of it becoming a spying tool.
Meanwhile, a study released by a division of the U.S. Treasury claimed that integrating a CBDC into the economy would destabilize banks, calling the harm it could cause to banking “significant” in times of stress.
On the other hand, Nigeria is witnessing increased adoption of its eNaira, as its fiat currency faces severe shortages. The total number of CBDC wallets in Nigeria sits at 13 million, growing more than 12 times compared to October 2022.
As of March, 114 countries, representing over 95% of the global GDP, are exploring CBDCs. According to the US-based think tank Atlantic Council, sixty-five nations are already in advanced stages.
