UAE Central Bank Completes Pilot Program For Its CBDC

The Central Bank of the United Arab Emirates (UAE) announced the completion of the first and the most extensive wholesale pilot that uses Central Bank Digital Currencies (CBDC) for cross-border transactions. According to the apex bank, the pilot phase was conducted in collaboration with a handful of financial institutions that the government backs.

Some of these contributors are the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Bank for International Settlements. This pilot program was carried out as part of ‘Project mBridge’, the first pilot use of wholesale CBDCs in the Middle East and North Africa (MENA) region.

Project mBridge, a custom-developed distributed ledger technology (DLT) platform was developed by the five contributors of the pilot phase and the central bank.

The project experiment with cross-border transactions using the CBDCs of various central banks. Markedly, this announcement signifies the first pilot use of wholesale CBDCs in the MENA region under Project mBridge.

During the pilot program, 20 commercial financial institutions across four jurisdictions participated using the mBridge platform for transaction settlements. The banks engaged the platform to settle different kinds of payments for corporate customers, focusing on cross-border trade. 

Cumulatively, the pilot phase recorded 160 million cross-border transactions payments and FX (foreign exchange) transactions which summed up to over Dh80 million approximately $21.78 million over six weeks.

Beyond UAE, CBDC Gains Traction Among Central Banks

Eventually, CBUAE attested to the fact that Project mBridge demonstrated faster, cost-effective, and secure cross-border monetary settlements using central bank money, identified as a G20 economic priority. It was also a reflection of how particular CBUAE is about providing world-class financial infrastructure and innovative payment systems.

Khaled Mohamed Balama, Governor of CBUAE, explained,

“The mBridge reflects the leadership vision for the UAE to be one of the leaders in CBDC development and issuance and the preferred regional hub for advanced financial infrastructure, as well as for the CBUAE to be among the top central banks globally.”

Several countries and jurisdictions are increasingly taking the initiative to launch a CBDC.

The Japan Credit Bureau (JCB) announced the start of its Japan CBDC (JCBDC) project a few days ago, a collaboration between IDEMIA, a french company, and Soft Space, a Malaysian fintech company. Also, the Bank of Jamaica (BOJ)  has plans to collaborate with the government to facilitate the use of its CBDC known as JamDex.

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