The Central Bank of the United Arab Emirates plans to launch the digital dirhams and will launch the first phase of the CBDC strategy

On March 23, it was announced that the Central Bank of the United Arab Emirates (CBUAE) would implement its Central Bank’s Digital Currency (CBDC) strategy, known as the Digital Dirhams. CBUAE has invited two entities, G42 Cloud and R3, as infrastructure and technology providers. The first phase of its CBDC strategy will be carried out in the next 12 to 15 months, with emphasis on the soft launch of mBridge, the concept verification of the bilateral CBDC bridge with India, and the use of the domestic CBDC issuance concept verification work covering wholesale and retail.

Interpretation of this information:

The Central Bank of the United Arab Emirates (CBUAE) has announced the implementation of its Central Bank’s Digital Currency (CBDC) strategy, known as the Digital Dirhams, with a soft launch of mBridge in the next 12 to 15 months. Two companies, G42 Cloud and R3, have been invited to provide infrastructure and technology for the CBDC strategy. The initial phase will prioritize the concept verification of the bilateral CBDC bridge with India and the use of the domestic CBDC issuance concept verification work covering wholesale and retail.

This move towards CBDCs is becoming increasingly popular as central banks explore the potential benefits of digital currencies, such as improving financial inclusivity and reducing transaction costs. The CBUAE’s CBDC strategy aims to streamline financial transactions and enhance the UAE’s financial ecosystem. The soft launch of mBridge will enable the CBUAE to test the functionality of their CBDC and identify any potential challenges.

The selection of G42 Cloud and R3 as infrastructure and technology providers indicates the CBUAE’s interest in utilizing cutting-edge technology to support their CBDC strategy. G42 Cloud is a leading cloud and artificial intelligence company, while R3 is focused on providing blockchain technology solutions for businesses and governments.

The emphasis on the bilateral CBDC bridge with India is particularly notable, as cross-border payments continue to be a challenge for many countries. If successful, the CBDC bridge could potentially improve the efficiency and speed of cross-border transactions between the UAE and India.

In summary, the CBUAE’s announcement of their CBDC strategy, the Digital Dirhams, and the selection of G42 Cloud and R3 as infrastructure and technology providers mark a significant move towards the digitization of the UAE’s financial ecosystem. The focus on the bilateral CBDC bridge with India also highlights the potential for CBDCs to improve cross-border transactions.