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UAE Central Bank set to roll out digital currency – News

UAE Central Bank set to roll out digital currency – News

The CBUAE has already taken several steps in its move to create a digital currency in February 2021. The Central Bank of the UAE aims to introduce digital currency as part of its 2023-2026 strategy, state news agency WAM reported on Monday. The strategy, in line with the growing worldwide disruptive trend initiated

The CBUAE has already taken several steps in its move to create a digital currency in February 2021.

The Central Bank of the UAE aims to introduce digital currency as part of its 2023-2026 strategy, state news agency WAM reported on Monday.

The strategy, in line with the growing worldwide disruptive trend initiated by the International Monetary Fund and the World Bank along with the G-20, includes supporting digital transformation in the financial services sector by adopting the latest technologies in artificial intelligence and big data, developing a strong and secure financial cloud infrastructure.

“CBDCs (central bank digital currencies) offer the opportunity to start with a ‘clean slate.’ It is crucially important that central banks take the cross-border dimension into account,” Jon Cunliffe, chair of the Committee on Payments and Market Infrastructures and deputy governor for Financial Stability of the Bank of England, said in a report prepared for the G20 meeting in Italy.

The CBUAE has already taken several steps in its move to create a digital currency in February 2021. The UAE regulator and the Digital Currency Institute (DCI) of the People’s Bank of China (PBC) have joined a central bank digital currency project for cross-border foreign currency payments.

The m-CBDC Bridge initiative is run in partnership with the BIS Innovation Hub, the Hong Kong Monetary Authority and the Bank of Thailand. It will further explore the capabilities of distributed ledger technologies by developing a proof-of-concept prototype to support real-time cross-border foreign exchange payment-versus-payment transactions in multiple jurisdictions, operating 24/7. It will analyse business use cases in a cross-border context with both domestic and foreign currencies.

Last week, the IMF, the World Bank and the Bank for International Settlements made a joint call for global cooperation on central bank digital currencies, advocating for their cross-border benefits.

In a statement, the three global institutions argued that coordination on digital currencies would shake up the status quo of having to rely on expensive and slow transfer services to send money around the world. Central bank digital currencies have the potential to be the real disruptor in the financial sector, as opposed to cryptocurrencies that are merely a tool for speculative investment, according to S&P Global Ratings.

“The price of a cryptocurrency is volatile and it can go down, but what cannot go down is the price of a CBDC,” Mohamed Damak, a senior director at S&P Global Ratings, has said.

“A digital dollar will always remain a digital dollar, unless the Fed decides otherwise. People trust central banks to create digital currencies and “we think the CBDC will be the real disruptor here,” he has said.

Indermit Gill, World Bank Group vice president of equitable growth, finance and institutions, said being faster, cheaper, more transparent and more inclusive, digital currency cross-border payment services would deliver benefits for citizens, businesses, and economies worldwide.

Around 90 per cent of the world’s central banks are currently looking at creating digital versions of their currencies, raising questions about how they will work and operate with each other.

The IMF, World Bank, and BIS prepared the report for a G20. The report envisions a central bank digital currency ecosystem where currencies could be exchanged with one another instantly and at all times. In the same way that central banks offer swapline to one another (to ensure, for example, that US dollars are readily available for exchange), digital currencies could offer the same services to retail users.

— issacjohn@khaleejtimes.com

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE’s mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.

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