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The UAE announced this week that it expects to complete the first phase of its CBDC strategy by mid-2024.
The United Arab Emirates (UAE) announced on Thursday that it expects to complete the first phase of its central bank digital currency (CBDC), the Digital Dirham, by mid-2024. The strategy includes a proof-of-concept work for a wholesale and retail CBDC. The Central Bank of the UAE (CBUAE) revealed in the announcement a collaboration with G42 Cloud, a cloud storage platform in the region, and R3, a New York-based blockchain firm. G42 will provide the infrastructure for the CBDC, and R3 will provide the technical aspects of the project.
According to the announcement, the Digital Dirham’s first phase will be completed in the next 12 to 15 months and comprises three central pillars. The first pillar is a soft launch of mBridge, an ongoing collaboration between the BIS and the central banks of Thailand, Hong Kong, the UAE, and the Chinese mainland. mBridge is an endeavour by the BIS to study cross-border payments and multi-CBDC transactions.
In Project mBridge, 20 banks in Hong Kong SAR, Thailand, China and the United Arab Emirates used the platform to conduct 164 payment and foreign exchange transactions totalling over $22 million. Read the report: https://t.co/dzQCxz9UYL @hkmagovhk @bankofthailand #CBDC pic.twitter.com/tWwhMszSGC— Bank for International Settlements (@BIS_org) October 26, 2022
The second of the three pillars is a proof-of-concept work for a bilateral CBDC bridge with India. The bilateral CBDC bridge between the two regions was announced on March 15.
Walking the talk ! @RBI and UAE Central Bank signed a MoU for innovation in financial products. Development and interoperability in the field of Central Bank Digital Currencies (CBDCs) closer than ever. @DasShaktikanta @MEAIndia @Economyae @FinMinIndia @nsitharaman #FilePic pic.twitter.com/GDHC8Z9HdM— India in UAE (@IndembAbuDhabi) March 15, 2023
The final pillar includes a proof-of-concept work for a domestic retail and wholesale CBDC.
UAE Embraces Crypto
The UAE has embraced the power and functionality of blockchain technology and cryptocurrencies. In January, the UAE Minister of Foreign Trade said that crypto would play a huge role in its foreign trade transactions. UAE royalty has also embraced cryptocurrencies through the Islamic Coin.
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