UAE’s Central Bank to Issue CBDC under New FIT Programme

The Central Bank of the United Arab Emirates (CUBUAE) will launch a central bank digital currency (CBDC) as one of the nine initiatives under its newly-launched Financial Infrastructure Transformation Programme (FIT). The apex bank disclosed this on Sunday in a press release published on its website.

According to the announcement, the other eight initiatives include the launch of a Card Domestic Scheme, a system for electronic know-your-customer verification and an open finance platform. Other initiatives include the introduction of a supervisory technology, the design of an innovation hub, creation of an instant payments platform, a financial cloud and a system that supports excellent customer experience. All of these initiatives, including the CBDC, will be fully integrated by 2026, the statement further said.

The bank explained that the FIT programme was designed to support the country's financial services sector and position it for global competitiveness.

“With a full integration set for 2026, the FIT Programme creates an important platform in support of the country’s ‘We the UAE 2031’ vision and National Digital Economy Strategy. It also further reinforces the CBUAE’s mission to enhance monetary and financial stability and consumer protection through robust financial infrastructure and the adoption of digital technologies," CBUAE explained.

UAE Sets Out 2023-2026 Roadmap

The CBUAE’s new update on its CBDC vision comes less than two years after the Middle East country joined other Asian regulators including the People’s Bank of China on a CBDC project that focuses on cross-border payments. CBUAE in 2021 also set out the country's 2023-2026 CBDC roadmap with seven objectives among which is to deploy artificial intelligence and big data solutions to drive the United Arab Emirates' (UAE) digital transformation in the financial services sector.

A year earlier, the UAE in partnership with the Saudi Central Bank concluded a joint one-year CBDC pilot project which highlighted the benefits of using a distributing payment system over a centralized payment structure.

Meanwhile, last year, the Central Bank of Iran announced plans to launch ‘crypto-rial,’ the country’s CBDC. The revelation came as the apex monetary authority of the country notified domestic banks and other credit institutions about a series of regulations related to the digital currency.

Across the world, central banks are still carrying out experiments on the feasibility and applicability of CBDCs. The European Central Bank recently selected five companies including Amazon to participate in its prototype exercise. About 30 Spanish banks also recently partnered to carry out proof-of-concept trials.

However, while the Bank of England is willing to pay £200,000 for a proof-of-concept CBDC wallet, BoE Governor Andrew Bailey recently questioned the need for a digital pound in front of the parliament’s Treasury Select Committee.