The Central Bank of UAE has revealed its plans to complete the first phase of its central bank digital currency project  in mid-2024. This new CBDC strategy will comprise bilateral ties with an Asian country as well as the launch of a proof-of-concept for CBDC issuance.

The strategy will include three separate phases that will facilitate the launch of the digital dirham. The first phase will focus on the soft launch of Project mBridge, which uses a platform based on distributed ledger technologies to perform cross-border payments experiments. Project mBridge originally included the participation of central banks from countries such as China, Thailand, and Hong Kong.

The second phase will focus on creating a proof-of-concept for bilateral CBDC bridges with India, and for the third pillar, it the bank wants to build a proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage. The Central Bank of UAE has also onboarded G42 Cloud and New York-based blockchain company R3 as infrastructure and technology providers for the implementation of the upcoming CBDC. Central Bank of UAE officials cited by financemagnates.

com talked about this new CBDC strategy and revealed its role in the Financial Infrastructure Transformation Programme (FIT), which aims to solidify the UAE’s position as a leading global financial hub. They also expressed their belief that the CBDC will support the country’s digitalisation efforts while promoting financial inclusion. CBDC progress in MENA The Central Bank of the United Arab Emirates (CBUAE) has announced the completion of its CBDC pilot in partnership with commercial banks in four jurisdictions in October 2022.

The multinational CBDC pilot was included in Project mBridge, which demonstrated faster, cost-effective and secure cross-border monetary settlements using central bank money according to CBUAE officials. According to industria. tech, the Arab Monetary Fund (AMF) released a report in January 2022 focusing on 17 Arab central banks, including Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Yemen, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Tunisia, and the Emirates.

The report revealed that 69% of Arab banks were still in the process of determining the type of digital currency that they want to issue. In addition, 25% were interested in adopting more than one type of digital currency, including hybrid, wholesale, and direct retail CBDCs. Other MENA countries looking into CBDC include Egypt and Morocco.

In 2021, the Central Bank of Egypt launched a study on the technical and strategic aspects of central banks' digital currencies and their potential impact on the local economy and payment systems. .