Emirates Central Bank has signed an agreement with companies “G42 Cloud” and “R3” to start implementing the central bank’s “Digital Dirham” digital currency strategy, one of the nine initiatives of the country’s financial infrastructure transformation plan.

“G42 Cloud” has been selected to provide infrastructure services for the project while “R3” will provide technical services, the bank said in a statement yesterday.

Partnerships

The partnerships come after the success of central banks’ digital currency initiatives, including a “stable” plan with Saudi Arabia’s central bank in 2020, the results of which confirmed the possibility of using a digital currency issued by the two central governments. A project for banks to settle cross-border payments also won the “Global Impact 2021” award. Presented by Central Banking Journal.

Among these initiatives is the piloting of a “bridge” project for digital currencies by cross-border central banks in collaboration with the Hong Kong Monetary Authority, the Bank of Thailand, the People’s Bank of China’s Digital Currency Institute and banks. Bank for International Settlements in 2022, through which financial transactions of real value were completed.

These initiatives were geared towards the implementation of the central bank’s digital currency strategy.

First stage

The first phase of the central bank’s digital currency strategy, expected to be completed within the next 12 to 15 months, includes three key pillars: piloting a bridge platform aimed at facilitating cross-border digital currency financial transactions and settlement of international trade payments, in addition to bilateral collaboration with India to prove the concept of centralized digital currencies. , working on proof of concept of digital currency for central banks to issue digital currency for use by individuals, companies and institutions in the UAE.

End time

As part of efforts to transform the UAE into a digital economy, the central bank’s digital currency will contribute to mitigating current challenges in local and cross-border payments, achieving financial inclusion and access to a cashless society. Providing more robust channels for payments infrastructure and local payments in the Emirates and ensuring an international, flexible and reliable financial system

In addition, the Central Bank is working on the UAE’s readiness to integrate payment infrastructure with digital tokenization (tokenization), which includes tokenized financial and non-financial functions.

Financial Center

Khaled Mohamed Salem Balami Al-Tamimi, governor of the Central Bank of the Emirates, said the central banks’ digital currency initiative is part of a financial infrastructure transformation plan that will cement the UAE’s leadership position as a global financial center.

“The launch of the Central Bank’s digital currency strategy includes the development of the money and payment system in the country, as its implementation aims to accelerate the pace of transition towards a digital economy and improve financial inclusion,” he added: “We look forward to the opportunities that the Central Bank’s digital currency will bring to our economy and society.” .

The initial strategy is expected to be finalized within the next 12 to 15 months.

Digital money

A central bank digital currency is a form of digital money issued and backed by a central bank that is risk-free and holds value, providing a safe, fast and low-cost way to move across borders. Payments.