The latest developments on the United Arab Emirates (UAE) financial infrastructure transformation (FIT) program highlights the country’s Apex bank’s intention to launch a central bank digital currency (CBDC) for cross-border and domestic transactions.
The CBDC, according to Khaled Mohamed Balama, Governor of the CBUAE, is a digital version of the dirham capable of tackling the difficulties and inefficiencies of cross-border payments, elevating the innovation drive for domestic payments, and establishing the groundwork for a vibrant digital future economy.
The launch of the UAE dirham has been in the pipeline for months, and it’s one of the nine key areas of the Central Bank of the United Arab Emirates (CBUAE) aimed at boosting the competitive advantages of the oil-rich middle east country.
UAE pushes CBDC forward
This first stage of the FIT will be preceded by the second stage, which involves an e-Know Your Customer platform and a digital assets innovation hub to help stop illegal activity in the industry.
Recall that the launch of the FIT program precedes the publication of the Virtual Assets Regulatory Authority’s (VARA) rule book, which contains operational guidelines and a prohibition on the issue of “privacy coins,” or cryptocurrencies with enhanced anonymity.
The UAE’s attempt to issue the digital dirham adds it to the countries establishing the CBDC. The UAE government is also considering the development of a unified card payment platform to promote the expansion of e-commerce, smooth transactions, and financial inclusion promotion.
UAE is also crypto-friendly
During a conversation with Bloomberg on Jan. 21, 2023, at the World Economic Forum meeting, Thani Al-Zeyoudi, the UAE’s minister of state for foreign trade, hinted at the nation’s intentions to integrate cryptocurrencies into a significant portion of its economic growth.
The minister also disclosed essential updates on the UAE’s trade alliances and initiatives, which it anticipates would strengthen its indigenous currency (rupees), the non-oil sector and the UAE economy at large.
On Sept. 29, 2022, the UAE Ministry of Economy released the launch address for its new metaverse office. The office will function as the virtual counterpart of the real branch and use avatars to host meetings and sign contracts.