Launch of Digital Dirham UAE’s Central Bank Next Plan
The Central Bank of the UAE (CBUAE) has announced the launch of its Central Bank Digital Currency (CBDC) strategy called ‘The Digital Dirham’. The deployment of a digital version of the dirham is part of the nine key initiatives in the country’s Financial Infrastructure Transformation (FIT) Program.
The CBDC will accelerate the country’s digitalization journey and promote financial inclusion. The CBUAE has enlisted G42 Cloud and R3 as the infrastructure and technology providers, respectively, for the implementation of its CBDC. The first phase of the Digital Dirham is expected to be completed over the next 12 to 15 months.
The Digital Dirham is a digital form of a government-issued currency, similar to cryptocurrencies, except that its value is fixed by the monetary authority and equal to the country’s fiat currency. The CBDC will support domestic and cross-border transactions. The launch of the CBDC strategy marks a key step in the evolution of money and payments in the country.
The CBUAE’s FIT program aims to transform the country’s financial infrastructure and position the UAE as a leading global financial hub. The CBUAE’s collaboration with Abu Dhabi’s digital finance services provider R3 and G42 Cloud will ensure the implementation of the CBDC. The CBDC is one of the initiatives as part of the CBUAE’s FIT program.
The CBDC will provide a secure, efficient, and cost-effective way of conducting transactions. The CBUAE’s CBDC strategy is expected to take the next 12-15 months for completion.
What is the purpose of the Digital Dirham
The purpose of the Digital Dirham is to provide a digital version of the dirham, the UAE’s fiat currency, as part of the country’s Financial Infrastructure Transformation Program.
The Central Bank of the UAE’s CBDC strategy focuses on three main pillars: the soft launch of mBridge, the proof-of-concept work for bilateral CBDC bridges with India, and proof-of-concept work for domestic CBDCs in wholesale and retail.
The Digital Dirham is expected to enhance cross-border trade settlement, promote financial inclusion, and accelerate the country’s digitalization journey. The launch of the CBDC strategy marks a key step in the evolution of money and payments in the country.
Benefits of using the Digital Dirham
The Digital Dirham is expected to provide several benefits, including enhancing cross-border trade settlement, promoting financial inclusion, and driving progress towards a cashless society.
The Central Bank of the UAE’s CBDC strategy aims to strengthen the country’s payment infrastructure, address issues around domestic and cross-border payments, and provide a secure, cost-effective, and efficient form of payment and store of value.
The Digital Dirham is also expected to accelerate the country’s digitalization journey and solidify the UAE’s position as a leading global financial hub. Additionally, the use of CBDCs is expected to increase global tokenized payment transactions by 47% to over 1 trillion by 2026.
How will the Digital Dirham promote financial inclusion
The Digital Dirham is expected to promote financial inclusion by providing a secure, cost-effective, and efficient form of payment and store of value, addressing issues around domestic and cross-border payments.
The Central Bank of the UAE’s CBDC strategy aims to enhance the country’s payment infrastructure, move towards a cashless society, and provide a secure and efficient form of payment and store of value.
The use of CBDCs is expected to increase financial inclusion by providing access to financial services to those who are unbanked or underbanked, as well as reducing the cost of financial transactions.
The Digital Dirham is also expected to accelerate the country’s digitalization journey and solidify the UAE’s position as a leading global financial hub.
