1. QiAi QuestsHome
  2. Metaverse & Beyond

Central Bank of the UAE Announces Digital Dirham Strategy: What You Need to Know

• Metaverse & Beyond • 87 views

On March 23, it was announced that the Central Bank of the United Arab Emirates (CBUAE) would implement its Central Bank\’s Digital Currency (CBDC) strategy, known as the Digital Di

Central Bank of the UAE Announces Digital Dirham Strategy: What You Need to Know

On March 23, it was announced that the Central Bank of the United Arab Emirates (CBUAE) would implement its Central Bank’s Digital Currency (CBDC) strategy, known as the Digital Dirhams. CBUAE has invited two entities, G42 Cloud and R3, as infrastructure and technology providers. The first phase of its CBDC strategy will be carried out in the next 12 to 15 months, with emphasis on the soft launch of mBridge, the concept verification of the bilateral CBDC bridge with India, and the use of the domestic CBDC issuance concept verification work covering wholesale and retail.

The Central Bank of the United Arab Emirates plans to launch the digital dirhams and will launch the first phase of the CBDC strategy

The Central Bank of the United Arab Emirates (CBUAE) has recently taken a big step forward in the world of digital currencies. On March 23, 2021, it was announced that CBUAE will implement its Central Bank’s Digital Currency (CBDC) strategy, which is now known as the Digital Dirhams. As a part of this strategy, CBUAE has invited two entities – G42 Cloud and R3 – as infrastructure and technology providers. The first phase of its CBDC strategy will be initiated in the next 12 to 15 months and will focus on several aspects like the concept verification of the bilateral CBDC bridge with India, the soft launch of mBridge, and the use of the domestic CBDC issuance concept verification work covering wholesale and retail.
In this article, we will discuss in detail what Digital Dirhams actually are, what implications they have, and how they might change future financial transactions.

What Are Digital Dirhams?

CBDC is an all-new digital payment form issued by a central bank. Instead of paper money, digital currencies are circulated by open ledger blockchain technology, which helps in the verification of transactions. The primary aim of introducing CBDCs is to provide an alternative payment method to boost the financial system, enhancing consumer welfare, and reducing the dependence on cash.
Digital Dirhams are the UAE’s central bank’s digital currency that aims at reducing cash circulation and expanding the benefits of digital money in the country. The use of Digital Dirhams could entirely change the transaction process of UAE’s monetary policy and create opportunities and risks for financial institutions.

What Implications Will Digital Dirhams Have?

Reduction in Cash Usage

Digital Dirhams could significantly reduce cash usage, which can play a significant role in the country’s economy. With digital currencies, transactions can happen instantly, no matter the amount or the location, and it prevents the need to carry cash around. This shift could completely change the dynamics of different markets, particularly for small and micro-sized businesses, which could lead to higher financial inclusion.

Improved Monetary Policy

The introduction of Digital Dirhams will empower CBUAE to have better control over the monetary policy of UAE. The conversion of currency in and out of digital form will enable better adjustment of interest rates as well as provide better speed and flexibility in implementing monetary policies. This will eventually lead to an overall positive impact on the country’s economy, including price stability, job creation, and increased customer welfare.

Enhancing Cross-Border Trade

While sending and receiving money overseas often takes time, digital currencies could hasten the process, stimulating relief to businesses and consumers. The use of Digital Dirhams could offer an excellent solution to the expensive and time-consuming process of cross-border payments by providing a more efficient, faster, and cheaper alternative.

What Will the Initial Launch of Digital Dirhams Look Like?

The initial launch of Digital Dirhams will have a dual concept verification, which will include both domestic and international aspects. The domestic concept verification will include the wholesale and retail issuance of the digital currency, while the international concept verification will focus on the implementation of the bilateral CBDC bridge with India.

Conclusion

With the introduction of Digital Dirhams, UAE is steadily marching towards a more digital economy. The Digital Dirhams could open up many new avenues for businesses, reduce costs, and provide better financial stability. The CBUAE’s plan of introducing Digital Dirhams will create a new era in the transaction process in the country, and it would allow the country to have better control over monetary policies, reduce cash usage, and boost cross-border trade.

FAQs

1. What is a CBDC?

CBDC stands for Central Bank Digital Currency, which is an all-new digital payment form issued by a central bank.

2. What is the primary objective of introducing Digital Dirhams in UAE?

The primary objective of introducing Digital Dirhams in UAE is to reduce cash circulation and promote digital payments.

3. How will Digital Dirhams change the dynamics of different markets?

Digital Dirhams could change the dynamics of different markets, particularly for small and micro-sized businesses, which could lead to higher financial inclusion by reducing cash usage, making transactions faster, and more efficient.

This article and pictures are from the Internet and do not represent qiAiAi's position. If you infringe, please contact us to delete:https://www.qiaiai.com/metaverse/9654.html

It is strongly recommended that you study, review, analyze and verify the content independently, use the relevant data and content carefully, and bear all risks arising therefrom.

Like (0)
Previous 03/23/2023 12:20
Next 03/23/2023 12:38

Related recommendations