The Central Bank of the United Arab Emirates (UAE) said it will experiment with its own digital currency and launch it between 2023 and 2026.
The main goal of the new strategy of the Central Bank of the UAE is to become one of the ten leading central banks in the world.
The UAE regulator has set a clear timetable for its implementation. Including this initiative in its development plan for the next few years.
The launch of the state digital currency implies the use of the UAE Pass digital identification system. Which will increase the population’s access to financial services.
In addition, the UAE’s state development program includes the introduction of digital technologies. Which will primarily be integrated into the finance industry through the use of artificial intelligence (AI) and big data. The UAE government also intends to apply the latest technologies in various monitoring and insurance systems.
The UAE Central Bank is actively exploring how government digital currencies can interact with existing payment systems. The regulator cooperates with other central banks on these issues. So, last year, the UAE Bank successfully tested the digital currency Aber with the Central Bank of Saudi Arabia for international payments. Later, the UAE Central Bank joined a project to study the potential of blockchain to facilitate cross-border payments.
The UAE showing interest in creating its own digital currency, and also positioning itself as a blockchain and cryptocurrency-friendly country. Recall that in June, the country’s first traded ETF, tied to Bitcoin, began trading on the country’s stock exchanges.
Thus, the central bank’s goals for 2023-2026 are in line with the UAE’s goals for the next 50 years as part of the country’s 2071 centenary agenda. Which aims to place them among the world’s most advanced economies.
Central banks around the world are developing digital currencies
Central banks around the world are looking to develop digital currencies amid the growing popularity of cryptocurrencies as an asset class among both retail and institutional investors. CBDC are different from cryptocurrencies like Bitcoin, which have fluctuated dramatically in recent months. Currently, the central bank does not accept or recognize cryptocurrencies or digital assets as legal tender in the UAE. The only legal tender is the UAE dirham.
CBUAE and the Central Bank of Saudi Arabia have already completed a pilot project on a central bank’s wholesale digital currency “to settle domestic and international transactions using central bank money using distributed ledger technology”, regulators said in February.
Building on this momentum, the UAE’s Central Bank has joined the second phase of a multi-digital currency project called the m-CBDC Bridge for Cross-Border Payments. It initiated by the Hong Kong Monetary Authority and the Bank of Thailand, the report said. The Digital Currency Institute of the People’s Bank of China is also part of the m-CBDC Bridge project. China was one of the first major economies to assess the potential of CBDC in 2014. And at the moment, it is China that is closest to the release of its own national digital currency. The exact launch date of the digital yuan is unknown. But China is preparing to use the national digital currency in Beijing during the 2022 Winter Olympics.