UAE central bank plans issuance of CBDC

The Central Bank of the United Arab Emirates (CBUAE) is launching a central bank digital currency (CBDC) as part of the first stage of its newly-launched Financial Infrastructure Transformation (FIT) program.

In a recent announcement, the CBUAE said the program aims to support the country’s financial services sector, promote digital transactions and make the UAE more competitive as a financial and digital payment hub. The CBDC will be used for both cross-border and domestic transactions to address issues and inefficiencies in payments. The first stage of the FIT program will also launch a unified card payment platform and an instant payments platform.

The FIT program includes nine initiatives, including e-Know Your Customer and an innovation hub. The CBDC initiative has been designed to promote innovation in domestic payments and address problems with cross-border payments. Khaled Mohamed Balama, Governor of the CBUAE, said the FIT program would “support a thriving UAE financial ecosystem and its future growth.”

Dubai’s virtual asset regulatory authority (VARA) recently released “Full Market Product Regulations,” including comprehensive guides on virtual asset activities for projects operating in the emirate. The regulations ban issuing “anonymity-enhanced cryptocurrencies,” commonly known as “privacy coins,” and related activities. According to Saqr Ereiqat, co-founder of Crypto Oasis, privacy coins are different from Bitcoin and Ether in that transactions can’t be traced, meaning they could potentially enable illicit activities.