Dubai Digital Currency; Everything you need to know about CBDC call for regulation
The UAE DBDC indicates the United Arab Emirates Central Bank Digital Currency. It is a digital currency introduced by the government of UAE to aid trading, serve as an alternative to standard currency, rival private digital currencies, and join the revolution of online currencies globally. It is one of the most important ambitions of the UAE government to join further the transformation going on in global financial markets.
UAE CBDC Framework
Now that you understand the meaning of the UAE Central Bank Digital Currency, it is time to know what the CBDC Framework means for further understanding.
To protect investors, and traders, accelerate the development of the digital currencies in the UAE, and cut the cost of cross-border monetary operations, the UAE Central Bank has advocated for the introduction of a comprehensive CBDC regulatory framework.
The call from the Apex Bank in the UAE followed its participation in the 5th meeting of International Financial Architecture (IFA) Working Group meeting within the G20 Finance Track for 2022 earlier in September.
Also, the call became a necessity after the announcement made on Twitter by the collaborative efforts of the Innovation Hub of the Hong Kong Monetary Authority, BIS (Bank of International Settlements), and the Central Bank of the UAE upon the completion of the maiden CBDC pilot. And this is about real fiat transactions and four entities utilizing mBridge, a specially-developed DLT platform.
The Mbridge platform is a collaborative monetary policy effort between multiple banks that includes the Central Bank of the UAE (CBUAE), Bank for International Settlements (BIS), Innovation Hub Centre in Hong Kong, the Hong Kong Monetary Authority (HKMA), the Bank of Thailand (BoT), and the Digital Currency Institute of the People’s Bank of China (PBoC).
What are the advantages of the UAE CBDC Regulatory Framework?
There are numerous benefits accrued to the UAE CBDC call for regulation which include:
- It will help accelerate digital transformation in the finance sector
A comprehensive CBDC regulatory framework will help herald a new dawn in the financial sector by boosting confidence amongst investors, partners, and relevant stakeholders through trust and compliance.
- Stimulate investment in UAE
A robust, comprehensive framework will go a long way to stimulate investment in the UAE, as people will be willing to trade and engage in transactions without fear of loss.
- Improve cross-border trade
The CBDC regulatory framework seeks to cut down costs involved in cross-border transactions, which will significantly improve regional trades.
What are the challenges of the UAE CBDC Regulatory Framework?
The major challenge of the UAE CBDC will likely be the implementations across regions and re-education of those affected.
Most people already enjoy the fiat ways of using money. Adopting digital currency is difficult, but following frameworks around it may be more challenging.
Thus, the central bank needs to work with relevant stakeholders to convey the benefit of the CBDC regulatory framework in UAE and invest in the orientation and education of all. This will help the UAE central bank pursue its Digital currency regulatory framework to facilitate digital growth in the financial sector and further drive initiatives that will cement the UAE’s position as one of the best 10 in web3.0 digital transformation.