The UAE is all geared up to take crucial steps to transform its existing financial systems with emerging next-gen fintech tools. After creating a supportive ecosystem for the crypto industry, the UAE is now turning its focus to include its central bank digital currency (CBDC) to the economy. CBDCs are built on the blockchain network and digitally represent existing fiat currencies. Transactions processed via CBDCs not only register permanent and unchangeable records on the blockchain, but also slash all kinds of transaction costs, even for instant international payments.
As part of its Financial Infrastructure Transformation Programme (FIT), the financial authorities of the UAE have begun working on developing the required technical and cyber security support.
“The programme comprises implementation of nine key initiatives. The first stage includes a series of digital payment infrastructures and services such as the launch of a card domestic scheme, an instant payments platform, and the issuance of CBDC for cross-border and domestic uses,” said an official post detailing the focus points for FIT.
The UAE is backing the creation of a cashless society in the coming years. Its CBDC plans are expected to roll-out in full potential by 2026.
The central bank of the UAE (CBUAE) is overseeing the creation and trials of the digital dirham.
The UAE bets that blockchain-powered fintech tools could improve regulatory compliance, reduce cost of operation, enhance innovation, and strengthen financial security in the next decade.
Last year, the UAE released a set of elaborate laws to govern its crypto sector. The nation wishes to establish itself as a hub for businesses around the digital assets sector.
Dubai created a special regulatory unit called the Virtual Assets Regulatory Authority (VARA) to oversee crypto-related businesses there.
The UAE now joins India, China, UK, Turkey, and Kazakhstan, among other nations, which have already paced forward in terms of creating their respective CBDCs.