In a show of digital prowess, Central Bank of the UAE (CBUA) has concluded MENA’s first central bank digital currencies (CBDCs) wholesale pilot, cementing the country’s position as one of the most progressive forces of virtual currencies in the region.
Conducted in partnership with its counterparts in Hong Kong and Thailand as well as the Digital Currency Institute of the People’s Bank of China and the Bank for International Settlements (BIS), the initiative involved 20 commercial banks across four jurisdictions. Dubai Islamic Bank was among the participating banks, along with Emirates NBD and First Abu Dhabi Bank.
Over 160 payment and foreign exchange transactions totaling over AED80 million (US$21.78 million) were settled directly on the mBridge platform over a six-week period, BIS confirmed in a report.
The experiment demonstrated the feasibility of peer-to-peer and instant exchange of multiple CBDCs on a single distributed ledger technology-powered network in reducing cross-border payment inefficiencies, which has been identified as a G20 economic priority.
“Financial exclusion is not just a problem for individuals; it is also affecting economies,” commented Cecilia Skingsley, the head of the BIS Innovation Hub. “This project makes important strides toward developing a platform that has the potential to foster more inclusive and efficient payments systems that will benefit those making and receiving payments in different currencies and jurisdictions as well as the overall functioning of the global financial system.”
The mBridge project follows the UAE’s many virtual assets measures including Project Aber – a one-year initiative with Saudi Arabia to explore the possibility of the issuance of a new dual-issued digital currency as a unit of settlement between commercial banks in the two jurisdictions as well as domestically. Dubai also introduced its Virtual Assets Regulatory Authority earlier this year.
CBUAE Governor Khaled Mohamed Balama in a statement noted that the regulator will “continue to establish the right governance framework for interoperable CBDCs to deliver tangible benefits to UAE companies and consumers”.