UAE Launches Digital Dirham Strategy to Enhance Payment Systems
The United Arab Emirates (UAE) has initiated a strategy to implement a central bank digital currency (CBDC) aimed at both retail and wholesale applications, as revealed in a recent announcement by the UAE’s Central Bank (CBUAE).
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An official signing event marked the commencement of the digital dirham’s implementation plan, with partnerships formed with R3 and G42 Cloud. These entities will provide the necessary infrastructure and technological support for the digital currency.
R3, recognized for its extensive involvement in central bank digital currency technology development, including projects with the Bank of International Settlements (BIS), along with G42 Cloud, a subsidiary of the AI conglomerate G42, have been chosen to spearhead this initiative. Notably, G42 has previously collaborated with OpenAI to enhance financial services technology in October.
The CBUAE emphasized that the introduction of the CBDC is a key component of the nation’s digital renovate efforts. It aims to improve the efficiency of both domestic and international payments, promote financial inclusivity, and facilitate the transition towards a less cash-reliant society.
Initial Phases and Collaborations
This initiative is part of the first stage in the CBUAE’s Financial Infrastructure Transformation (FIT) Programme, which includes nine key projects. Over the next 12 to 15 months, it will focus on three main areas.
The initial phase involves the introduction of mBridge, a platform designed to enable instant cross-border payments for settling international commerce. Recently, the central bank successfully executed its inaugural international transaction combining the digital dirham and the Chinese digital yuan, amounting to $13.6 million, via mBridge.
Subsequent phases will explore the feasibility of CBDC bridges with India, in light of the Reserve Bank of India‘s advancements in CBDC privacy technology, followed by trials for domestic applications of the CBDC, encompassing both retail and wholesale transactions.
The Vision Behind the Digital Dirham
The CBUAE’s pursuit of a digital dirham stems from its goal to bolster the country’s payment systems and prepare for a future dominated by “tokenized” transactions, where everyday activities involve interactions with blockchain-based tokens for a variety of purposes.
CBUAE Governor H.E. Khaled Mohamed Balama stated that the CBDC would significantly propel the nation’s digital transformation and enhance financial accessibility. He expressed eagerness to discover the broader economic and societal benefits that the CBDC could offer.
Furthermore, last month saw the launch of a $250 million venture by Bridge Tower Capital and Deus X, named BridgeTower Middle East. This initiative is set to develop digital asset infrastructure in the UAE, fostering the adoption of institutional-level cryptocurrency throughout the region.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
The agreement offers innovative and customer-centric solutions to CBD cardholders across all segments
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Commercial Bank of Dubai (CBD), one of the leading banks in the United Arab Emirates, has announced an exclusive multi-year strategic partnership with Visa, a global leader in digital payments, for credit and debit cards. This partnership aims to enhance digital payment adoption in the UAE, offering innovative and customer-centric solutions to CBD cardholders across all segments.
The agreement was signed by Khaled Al Hammadi, General Manager of the Personal Banking Group at CBD, and Salima Gutieva, Visa’s Vice President and Country Manager for the UAE.
The signing ceremony was attended by Dr. Bernd van Linder, CEO of Commercial Bank of Dubai, and Andrew Torre, Visa’s Regional President for Central and Eastern Europe, the Middle East, and Africa.
As part of this partnership, CBD and Visa are also partnering to establish a ‘Centre of Excellence’ powered by Visa Consulting and Analytics (VCA), dedicated to accelerating and simplifying customer’s payment experiences. By leveraging core data assets and deriving insights, VCA will formulate actionable recommendations that aim to address business challenges and offer personalized solutions to customers. This collaborative approach will support CBD’s goals of market expansion, product design, customer acquisition, and engagement improvement, focusing on areas such as encouraging card usage through engaging and rewarding gamification, positioning CBD Visa cards as the top choice in digital wallets, enhancing cross-border transactions and payment speed, and expanding our footprint through strategic digital merchant collaborations.
Moreover, CBD and Visa are redefining the marketing landscape for the CBD card business through initiatives such as leveraging advanced technology to enhance digital customer onboarding experiences, sponsoring high-profile events like the Olympics, launching the Visa Instalment Solution in the UAE to introduce flexible payment options for our customers directly through Point-of-Sale (POS) machines, and offering comprehensive local and international benefits, focusing on the complete lifecycle of new and existing CBD Visa cardholders.
Dr. Bernd van Linder, Chief Executive Officer, Commercial Bank of Dubai, said, “We are excited to build on our partnership with Visa as we continue our mission in providing innovative and customer-centric payment solutions. The financial sector landscape is changing dramatically with technological disruption, emergence of new players, as well as constantly evolving customer expectations. Our collaboration with Visa will help us in developing new business models and providing more personalized customer offerings. At CBD, we are committed to playing a leading role in the digitization of the financial payments sector and introducing innovative financial solutions that meet our customers’ evolving needs and deliver seamless banking experiences.”
Khaled Al Hammadi, General Manager, Personal Banking Group at CBD, further added, “We are proud of this extended and strategic partnership with Visa. With Visa’s global expertise and CBD’s dedication to meeting the needs of our customers, we aim to provide a more seamless payment solution, delivering a variety of competitive and innovative features, products, and offers that are data-driven and are based on customer feedback. This includes recognizing and rewarding our customers, enhancing their banking experience, and delivering tangible benefits.”
Salima Gutieva, Visa’s VP and Country Manager for UAE, said, “We are delighted to expand our partnership with CBD with this exclusive multi-year partnership for their credit and debit portfolio. We will continue to work together to develop attractive products that deliver seamless, secure and rewarding experiences to the bank’s customers. CBD will be able to leverage Visa‘s industry-leading data and analytic capabilities to further drive innovation with personalized experiences for Visa cardholders. We also look forward to bringing value to local retailers and contribute to the UAE government’s efforts to grow the digital economy.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
