• The Central Bank of the United Arab Emirates (CBUAE) is inching closer to fully launching its central bank digital currency (CBDC) for domestic and cross-border payments.
• The CBUAE signed an agreement with Abu Dhabi’s G42 Cloud and digital finance services provider R3 to facilitate the CBDC implementation.
• Nigeria is witnessing increased adoption of its eNaira, as paper currency faces severe shortages.
Central Bank of UAE Signs Deal For CBDC Strategy
The Central Bank of the United Arab Emirates (CBUAE) has taken a major step towards launching its central bank digital currency (CBDC), known as the Digital Dirham, with the signing of an agreement with Abu Dhabi’s G42 Cloud and digital finance services provider R3. The move marks a key milestone in positioning the UAE as a global financial hub.
Purpose Of CBDC Strategy
This strategy will primarily be used to address challenges associated with domestic and cross-border payments, while also promoting financial inclusion as part of an effort to become a “cashless society”. The first phase consists of soft launching “mBridge” for international trade, along with proof-of-concept work for bilateral CBDC bridges between India and UAE, and domestic CBDC issuance for wholesale and retail use. This stage is expected to be completed in 12–15 months.
UAE Governor’s Statement
At the initial unveiling of this strategy on February 12th, Khaled Mohamed Balama, Governor of the Central Bank said: “The launch of our CBDC strategy marks a key step in the evolution of money and payments in our country. It will accelerate our digitalization journey and promote financial inclusion.”
Debates Over Viability In US
In response to this news, Republican Senator Ted Cruz introduced a bill to block any potential Federal Reserve attempts at issuing direct-to-consumer CBDC over fears that it could become a spying tool. A study from a division within U.S Treasury called integrating such assets into their economy would destabilize banks significantly during times of stress.
Increased Adoption Of eNaira In Nigeria
On contrast, Nigeria has been experiencing increased adoption rates for its own eNaira asset due to paper currency shortages across the country; 13 million wallets exist right now which is 12 times more than what existed back in October 2022. 114 countries are exploring or have already adopted some form of CBDC technology representing 95%+ global GDP combined — demonstrating how widely accepted these assets are becoming worldwide.