UAE central bank sets sights on digital currency launch

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The United Arab Emirates wants to spearhead the march into a bold new world of central bank digital currencies (CBDCs). In a recently-launched roadmap, the country’s central bank revealed its ambition to become one of the world’s top ten banks, and it believes a CBDC will play a significant role in its ambitious goal.

The UAE has cemented its position as the Middle East’s leading hub for innovations. Its leading city Dubai has become a global business hub and continues to attract leading multinationals. The country is seeking to transition this leadership to a global level, and according to a report by Gulf News, a CBDC might prove critical for the oil-rich country.

In its 2023-2026 roadmap, the Central Bank of the UAE (CBUAE) has identified seven areas that it will focus on as it seeks to join the U.S., China, Japan and Germany at the upper echelons of global finance.

These areas include artificial intelligence and big data solutions in payments and insurance. These will be connected to a digital ID (DID) infrastructure the country is building, enabling seamless interconnected payments. Known as the UAE PASS, the DID also allows citizens to access multiple government services quickly. At a time when climate change is taking precedence globally, the UAE is also seeking to focus on growing a ‘green economy.’

All these advancements will be tied together by a financial system that runs on a CBDC.

The CBUAE is no stranger to CBDCs and has been working in a joint CBDC venture with Thailand, Hong Kong and China for months now. As CoinGeek reported, the UAE and China joined Project Inthanon-LionRock this year, but Hong Kong and Thailand had been working on it since 2019.

Together, the four countries hope to set the stage for other central banks in Asia to explore DLT and CBDCs. Their partnership has focused on international trade settlement, capital market transactions and cross-border fund transfers.

Aside from its CBDC focus, the UAE has become an important player in the blockchain space. Dubai in particular has become an epicenter of innovations in blockchain technology. CoinGeek’s Claire Celdran explored Dubai’s rising prominence in the industry in the recent BSV Stories series, including the government’s efforts to promote the technology.

Dubai will now be home to a new Bitcoin SV Hub which will foster development and innovation in the blockchain sector in the Middle East.

Bitcoin Association’s Founding President Jimmy Nguyen acknowledged UAE’s importance to the growth of blockchain, stating, “This is a region we have found to really be focused on new technologies, and the governments here are very active in driving implementation of new technology, and in particular blockchain.”

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: BSV Stories – Episode 4: The Middle East’s Blockchain Race