UAE Central Bank To Launch Programme To Boost Digital Transformation

Key Points:

• As part of a new initiative to speed up digital transformation, the central bank of the UAE intends to issue a CBDC for local and international payments.
• One of the nine projects of the Financial Infrastructure Transformation Program of the central bank is the release of a digital version of the UAE dirham.

The Central Bank of the United Arab Emirates (UAE) plans to launch a central bank digital currency (CBDC) for cross-border and domestic use as the first of its newly launched Financial Infrastructure Transformation (FIT).

In the UAE’s Central Bank recent announcement, the central bank introduced the FIT programme, emphasizing that it aims to support the country’s financial services sector. The central bank noted that the initiative will facilitate digital transactions and aims to enhance the UAE’s competitiveness as a financial and digital payment hub.

The issuing of a CBDC is part of the FIT programme’s initial phase. The central bank claims that issuing a CBDC will alleviate the issues and inefficiencies associated with cross-border payments and, in turn, foster innovation in domestic payments.

Khaled Balama, the Governor of the Central Bank, stated:

“The FIT programme embodies the directions and aspirations of our wise leadership towards digitising the economy and developing the financial sector.”

The FIT programme also includes a domestic card scheme, an instant payments platform, a financial cloud and supervisory technology, the Central Bank said in a statement on Sunday.

During the first phase of the initiative, the government also intends to introduce a digital dirham, a unified card payment platform to support the expansion of e-commerce, and an instant payment platform to promote financial inclusion and allow a cashless society.

As cryptocurrencies gain appeal among institutional and individual investors as an asset class, central banks are studying their growth.

A new state-backed digital pound that might be introduced this decade is one of the future central bank currencies that the Bank of England and Treasury have outlined in their roadmap.

The Reserve Bank of India launched its first e-rupee pilot program last year, enabling select institutions to settle government bond secondary market transactions using the digital rupee. The RBI intends to begin testing the retail applications of the Indian rupee’s digital version.

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