The Central Bank of UAE (CBUAE) is collaborating with R3, G42 Cloud and Clifford Chance for the launch of its central bank digital currency (CBDC) implementation strategy.
In anticipation of the launch of its CBDC implementation strategy, the CBUAE has selected R3 as its phase one technology provider and G42 Cloud as its phase one infrastructure provider. In addition to this, Clifford Chance has been designated to provide critical legal oversight for the strategy.
The strategy, which represents one of nine initiatives in the CBUAE’s Financial Infrastructure Transformation (FIT) Programme, sets out a roadmap for applying CBDC across a range of domestic and cross-border use cases in the region.
The first phase of the strategy, with is expected to take place over the next 12 to 15 months, comprises three primary pillars. These include initiating real-value cross-border CBDC transactions for international trade settlement, proof-of-concept work for bilateral CBDC bridges with India, and finally, proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage.
As part of the CBUAE’s programme for digital transformation, the implementation of the CBDC strategy seeks to address the various pain points associated with the cross-border payment process, while enhancing financial inclusion and further strengthening the UAE’s payment infrastructure.
Therefore, the technological support of R3 will enable CBUAE to ensure its own readiness for the potential future tokenisation of financial and non-financial activities, in addition to the digitalisation of other financial services.
The next stage of the CBDC journey
David E. Rutter, CEO at R3, describes the CBUAE’s strategy as “another landmark moment in bringing CBDCs even closer to production and issuance.”
Rutter recognises CBDCs’ ability to strengthen financial market infrastructure in several ways, including “more efficient cross-border payments,” “faster settlement periods” and the “streamlining of multi-party processes.”
He affirms the CBUAE’s significant progress in realising these benefits. “We are honoured and excited that R3 has been selected to design and build CBUAE’s CBDC ecosystem in this innovative move towards building a more open, trusted, and enduring digital economy,” Rutter comments. “We look forward to supporting the CBUAE in the next stage of its CBDC journey.”
In addition to this, Talal Al Kaissi, CEO of G42 Cloud, explains that with its UAE heritage, G42 Cloud has “seen first-hand the country’s rapidly advancing status as a global fintech hub.”
“We look forward to working with the CBUAE and R3 to deliver a CBDC infrastructure that meets the highest standards of efficiency, security and innovation,” comments Al Kaissi.
Jack Hardman, partner at Clifford Chance and head of fintech in the Middle East, comments: “As CBDC development moves from research to real-life building, it is vital that central banks are aware of the legal implications of any chosen design feature or strategy, in addition to how this emerging technology interacts with existing regulations.
“Clifford Chance has an established track record as a leading advisor in the fields of financial services and technology, and we look forward to working with the CBUAE on its CBDC implementation strategy,” closes Hardman.