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
Employment grew for the 16th consecutive month as companies expanded.
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According to a recent PMI report, Qatar experienced its fastest non-energy sector growth in almost two years in June, driven by surges in both existing and new business activities.
The Purchasing Managers’ Index (PMI) headline figure for Qatar reached 55.9 in June, up from 53.6 in May, with anything above 50.0 indicating growth in business activity. Employment also grew for the 16th month in a row, and the country’s 12-month outlook remained robust.
The inflationary pressures were muted, with input prices rising only slightly since May, while prices charged for goods and services fell, according to the Qatar Financial Centre (QFC) report.
This headline figure marked the strongest improvement in business conditions in the non-energy private sector since July 2022 and was above the long-term trend.
The report noted that new incoming work expanded at the fastest rate in 13 months, with significant growth in manufacturing and construction and sharp growth in other sectors. Despite the rising demand for goods and services, companies managed to further reduce the volume of outstanding work in June.
Companies attributed positive forecasts to new branch openings, acquiring new customers, and marketing campaigns. Prices for goods and services fell for the sixth time in the past eight months as firms offered discounts to boost competitiveness and attract new customers.
Qatari financial services companies also recorded further strengthening in growth, with the Financial Services Business Activity and New Business Indexes reaching 13- and nine-month highs of 61.1 and 59.2, respectively. These levels were above the long-term trend since 2017.
Yousuf Mohamed Al-Jaida, QFC CEO, said the June PMI index was higher than in all pre-pandemic months except for October 2017, which was 56.3. “Growth has now accelerated five times in the first half of 2024 as the non-energy economy has rebounded from a moderation in the second half of 2023,” he said.
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
