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
Total income was higher by 10% year-on-year (YoY) at AED 300 million in the six-month period
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United Arab Bank PJSC (UAB or “the Bank”) has announced its financial results for the six months ended 30th June 2024. UAB reported a net profit before tax of AED 152 million for H1 2024, a 26% increase compared to AED 121 million for H1 2023. The net profit after tax for H1 2024 stood at AED 139 million, up 15% from AED 121 million in the same period last year. Earnings per share rose to AED 0.07 in H1 2024 from AED 0.06 in H1 2023.
Total income increased by 10% year-on-year to AED 300 million for H1 2024, compared to AED 273 million for H1 2023, driven by a 26% increase in net interest income. The Bank’s capital position remains strong with a CET1 ratio of 13% and a total capital adequacy ratio (CAR) of 18%.
UAB‘s liquidity profile is robust, with advances to stable resources ratio of 75% and an eligible liquid asset ratio of 19%, both comfortably above regulatory thresholds. The Bank’s credit ratings were affirmed by Fitch and Moody’s at BBB+/Ba1, with stable and positive outlooks respectively.
UAB’s performance in the first half of 2024 demonstrates significant growth in total assets, increasing by 12% compared to December 2023, and reflects a strategic focus on quality and farsighted risk management. These results indicate that the Bank is well-positioned to continue its growth trajectory.
Commenting on the Bank’s performance, H.H. Sheikh Mohammed bin Faisal bin Sultan Al Qassimi, Chairman of the Board of Directors of United Arab Bank, said: “UAB’s strong performance in the first half of 2024 reflects the successful implementation of our growth strategy and reinforces our commitment to delivering sustainable value to our shareholders. We are confident that our prudent business model shall continue to deliver a solid performance and deal with the opportunities and challenges that will present themselves.”
He added: “As we move ahead into the second half of the year, we remain committed to enhancing our customers’ banking experience and contributing to the growth and prosperity of the UAE’s economy.
Shirish Bhide, Chief Executive Officer of United Arab Bank, commented: Our customer-centric approach and sustainable growth model has led to a 15% increase in net profit and a 12% growth in total assets. Our positive performance is a testament to the successful execution of our strategic priorities and clear evidence of the success of the many initiatives that have been implemented at the Bank. Going forward, we will continue investing in our growth strategy and digital capabilities, while equally focusing on developing innovative products and services that meet our customers aspirations whilst upholding the highest standards of compliance and internal controls.”
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
