CBUAE Inks Deal with G42 Cloud, R3 on Implementing CBDC Strategy

The UAE is taking steps forward to launch its digital currency, the digital dirham, for domestic and cross-border payments as soon as possible.

The Central Bank of UAE (CBUAE) inked an agreement with Abu Dhabi-based G42 Cloud and financial innovation firm R3 to accelerate the implementation of the UAE’s central bank’s Central Bank Digital Currency (CBDC) Strategy, according to WAM News Agency.

According to the agreement with the CBUAE, G24 Cloud and R3 will be the infrastructure and technology providers, respectively, for its CBDC implementation.

The Emirati central bank said that the CBDCs would help to address the weak points of domestic and cross-border payments, enhance financial inclusion and promote the transformation to a cashless society.

The CBDC’s first strategy, which is predicted to complete over the next 12 to 15 months, includes three major pillars, the soft launch of mBridge to facilitate real-value cross-border CBDC transactions for international trade settlement, proof-of-concept work for bilateral CBDC bridges with India, and finally, proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage.

Earlier, CBUAE Governor Khaled Mohamed Balama said: “CBDC is one of the initiatives as part of the CBUAE’s Financial Infrastructure Transformation (FIT) program, which will further position and solidify the UAE as a leading global financial hub. The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country.”

“CBDC will accelerate our digitalization journey and promote financial inclusion. We look forward to exploring the opportunities that CBDC will bring to the wider economy and society,” Balama added.

CBDC’s total value of payments is expected to grow 260,000% in the coming decade to record $213 billion annually by 2030, compared to $100 million in 2023, a new study revealed.

According to Juniper Research, the radical change will occur because of the increasing world governments’ adaption of the CBDCs to bolster financial inclusion and tighten control over how digital payments are made.