UAE Plans to Issue a CBDC to Promote Digital Payments

The central bank of the United Arab Emirates (UAE) is planning to issue a central bank digital currency (CBDC) for domestic and cross-border payments as part of a new project to accelerate digital transformation.

The issuance of a digital version of the UAE's dirham is one of nine initiatives of the central bank's Financial Infrastructure Transformation Program, announced on Sunday.

According to the announcement, the first stage of the project sets up a "series of digital payment infrastructures and services" including the issuance of a CBDC for "cross-border and domestic uses."

"These digital payment initiatives will drive financial inclusion, promote payment innovation, security and efficiency, and achieve a cashless society," the announcement said, adding that a digital dirham will "address the problems and inefficiency of cross-border payments and help drive innovation for domestic payments respectively."

Jurisdictions around the world are considering the issuance of CBDCs to facilitate improvements in the payments and banking sectors, with the Bank of England recently joining in by publishing its own plans for a digital pound.

Dubai, one of the UAE's emirates, published comprehensive rules to regulate the crypto sector last week, including the establishment of a licensing regime for crypto companies and said it wants to prohibit the issuance and activities related to anonymity-enhancing crypto.

Read more: Dubai Mandates Licensing for Crypto Companies as It Sets Out Regulatory Requirements