Recently, the Central Bank of the United Arab Emirates (CBUAE) has been planning to issue a central bank digital currency (CBDC) for domestic and cross-border payments as a part of a new project to accelerate digital transformation.
On Sunday, the central bank released its Financial Infrastructure Transformation Program, and the issuance of a digital version of the UAE’s currency, the Dirham, is a part of it. According to the announcement, the project’s first stage sets up a “series of digital payment infrastructure and services,” including the issuance of a CBDC for “cross-border and domestic uses.”
The announcement implied that digital payment would bring in financial and promote innovation. It also said that the digital Dirham would be efficient in cross-border payments. It read:
These digital payment initiatives will drive financial inclusion, promote payment innovation, security, and efficiency, and achieve a cashless society. A digital dirham will address the problems and inefficiency of cross-border payments and help drive innovation for domestic payments respectively.
Last week, Dubai, one of the emirates of the UAE, published comprehensive rules to regulate the crypto sector, including the establishment of a licensing regime for crypto companies, and said it wants to prohibit the issuance and activities related to anonymity-enhancing crypto.
According to a survey by Chainalysis, the adoption of crypto, especially Bitcoin (BTC), in the Middle East and North Africa (MENA) has been exponential. MENA countries which comprise Egypt, Iran, Iraq, Libya, Morocco, Oman, Syria, Tunisia, United Arab Emirates, Qatar, Saudi Arabia, Algeria, Bahrain, Algeria, Bahrain, Yemen, and Lebanon, are displaying the highest rates of crypto adoption as per Chainalysis. Of the mentioned countries, the UAE is the one receiving the most attention as the Gulf region’s cryptocurrency market has increased exponentially this year.
CBDCs have become a relatively familiar concept around the globe, with several nations bringing their digital currencies. In the past year, many countries started their CBDC journeys, like India and Pakistan, whereas some countries started the distribution, like China.
In November, Todayq News reported that the Bank of Japan would begin working with commercial banks and other organizations in the spring of 2023 to identify any issues with deposits and withdrawals and verify that a central bank digital currency (CBDC) can function during natural catastrophes and in places without an internet connection. Japan’s “three megabanks” are typically Mizuho Financial Group Inc., Sumitomo Mitsui Financial Group Inc., and Mitsubishi UFJ Financial Group Inc., even though the study omitted their names.