UAE Moves Ahead with CBDC in Partnership with R3 and G42 Cloud

banner-image

The Central Bank of the United Arab Emirates (UAE) is poised to embark on the initial phase of its central bank digital currency (CBDC) strategy, targeting both retail and wholesale applications.

Initiating this strategic endeavor, the UAE authority recently marked a significant milestone with a signing event on March 23, collaborating with technology giants R3 and G42 Cloud, a subsidiary of the UAE-based AI holding company G42. 

R3 will provide the foundational infrastructure for the digital dirham, while G42 Cloud will contribute cutting-edge technology solutions.

The United States Federal Reserve recently said that the digital dollar remains a significant focus for the central bank. Multiple nations around the world are focusing on the same concept.

UAE Moves Forward with CBDC

The inaugural phase of the strategy encompasses three key components. Firstly, it envisions the soft launch of Project mBridge, followed by a proof-of-concept for a bilateral CBDC bridge with India, a pivotal trading partner for the UAE. Lastly, it will involve a proof-of-concept for a domestic CBDC tailored for both wholesale and retail usage.

Addressing Various Payment Challenges

According to the statement from the Central Bank of the UAE, the implementation of CBDC is anticipated to address various challenges associated with domestic and cross-border payments, bolster financial inclusion efforts, and propel the nation towards a cashless society.

This CBDC strategy dovetails with the central bank’s broader Financial Infrastructure Transformation Programme, underscoring the UAE authority’s commitment to modernizing the country’s financial landscape.

UAE Actively Involved in Cross-Border Initiatives

The central bank of the UAE has been actively involved in pioneering cross-border CBDC initiatives, having been an original participant in Project mBridge, hailed as the “first real-value cross-border CBDC pilot.” Additionally, it cited Project Aber, conducted in collaboration with the Saudi Central Bank, as a precursor to the current strategy.

International professional services firm EY noted that CBUAE is spearheading efforts to encourage commercial banks and payment processors in the UAE to participate in a pilot integration with the CBUAE node for issuing the Digital Dirham. 

Furthermore, the regulator has mandated Digital Dirham adoption by all UAE licensed financial institutions (LFI) by 2026.

Implementation Timeline of 12 to 15 Months

The partnerships with R3 and Abu Dhabi-based G42 were formally announced in March 2023, with an estimated implementation timeline of 12 to 15 months. Notably, G42 previously forged a collaboration with OpenAI in October, focusing on various sectors, including financial services.

Recently, SWIFT also unveiled the outcomes of the second phase of sandbox testing for its CBDC interlinking solution, known as a connector. Talking about the US, presidential candidate Donald Trump has outrightly said that he will fight against the creation of a CBDC in the country.

May 25, 2024

Marathon Digital CEO Fred Thiel is excited to team up with..

May 25, 2024

The Coinbase legal team asserted that the SEC is attempting to..

May 25, 2024

Previously, the Delaware Court of Chancery had dismissed the BitGo case..

ads-image ads-image