UAE launches the much awaited Digi Dirham

Partnering with G42 Cloud and Enterprise blockchain group R3, the CBUAE or Central Bank of UAE has launched its Central Bank Digital Currency project with much flourish.

G42 and R3 will provide the infrastructural and technology support to CBUAE in kickstarting its revolutionary digital currency which is anticipated to complete its first phase towards the middle of 2024.

However, UAE’s digital currency journey didn't begin abruptly. It is a well calculated and well placed culmination of some very successful CBDC initiatives that were rolled out from 2020.

An international pilot CBDC dates back to September 2022 and it was done with partners like Hong Kong, Thailand, the central banks of China, and the International Settlement Bank.

The CBDC strategy will be rolled out in phases that will spread over a couple of years. The first phase is anticipated to be completed in the next 15 months and it will be implemented in three major ways.

The three pillars of Phase 1 of CBUAE’s CBDC are

• Soft Launch to evaluate cross-border transactions facilitated via CBDC is viable for international trade
• Evidence of concept work for a bilateral exchange of digital currency with India- UAE’s second largest trading partner and very friendly one at that!
• Evidence that CBDC can be a game changer for domestic issuance including wholesale and retail trade.

The Digital Currency launch or the much awaited and anticipated digital dirham roll out is not a stand alone initiative. It comes under the most ambitious Financial Infrastructure Transformation (FIT) programme initiated by the Central Bank, CBDC being one of the 9 strategies chalked out for the next couple of years.

This digital dirham launch will further accelerate the emirate’s journey towards digitisation and catalyze greater financial inclusion. With greater and wider options available, it will definitely attract a wider group of investors.

FIT is aimed at positioning and buttressing the UAE as the global financial hub. The introduction of CBDC is a disruptive step towards money and payments evolution in the Emirate.