Yesterday the Central Bank of the UAE unveiled a plan for nine initiatives as part of its Financial Infrastructure Transformation (FIT) program. A central bank digital currency (CBDC) for both domestic and cross border use was one of three initiatives earmarked as part of the first stage.
No specific timescale was given for the CBDC plans, but the central bank aims to complete all nine initiatives by 2026.
Motivations for the cross border CBDC are to improve international payment efficiencies and for the domestic CBDC to drive payment innovation.
The central bank is one of four participants in Project MBridge, alongside the central banks of China, Hong Kong and Thailand. This is an interbank or wholesale CBDC initiative that is still ongoing. Several other cross border CBDC projects were purely experimental, but this one has progressed to the minimal viable product phase intending to have a production deployment.
In 2020, the UAE also ran a trial for a shared cross border digital currency with Saudi Arabia.
At this stage, it is unclear whether the UAE CBDC project will be targeted purely at banks or directly at consumers. Given the short timescale, a wholesale solution seems more likely.
“We are proud to be building an infrastructure that will support a thriving UAE financial ecosystem and its future growth,” said H.E. Khaled Mohamed Balama, Governor of the CBUAE.