The concept of Central Bank Digital Currency (CBDC) has captured the attention of various stakeholders, ranging from the crypto community to investors, bankers, and even central banks themselves. Among the countries actively exploring the potential of CBDCs, the United Arab Emirates (UAE) stands out as a leader in the race to adopt state-guaranteed digital currencies.
According to a survey conducted by Switzerland’s Bank for International Settlements (BIS) in 2021, a remarkable 86 percent of central banks were actively researching CBDCs. In line with this trend, the UAE Central Bank made headlines in March when it announced its selection of infrastructure and technology partners, unveiling its “Digital Dirham” strategy as a precursor to the launch of a CBDC.
The UAE’s inclination towards a cashless society is well-established, with notable advancements already made by financial institutions. Mashreq, for instance, has gained recognition for its virtual branches, while First Abu Dhabi Bank (FAB) introduced a cashless payments system in December. As the digital landscape continues to evolve and crypto garners widespread popularity, it is only natural for the UAE to explore the potential of CBDCs.
By embracing a CBDC, the UAE aims to enhance financial inclusion, improve payment efficiency, and stay at the forefront of technological advancements in the global financial landscape. However, the implications of introducing a state-guaranteed digital currency are multifaceted and warrant careful consideration.
As the UAE takes steps towards realizing its CBDC ambitions, the world watches closely to assess the impact of this digital transformation. With the potential to reshape the financial landscape and redefine the way transactions are conducted, CBDCs are poised to play a significant role in the future of the global economy.
