- The Gulf country is planning to introduce its own digital dirham.
- The central bank of UAE has released a programme to develop the financial sector of the country.
- The FIAT programme consists of nine major initiatives.
On February 12, 2023, the Central Bank of the United Arab Emirates (CBUAE) released a report which shows the country is willing to launch a central bank digital currency (CBDC) for domestic and cross-border payments as part of a new project to hasten the digital transformation of the financial service sector.
The recent announcement of CBUAE introduced the Financial Infrastructure Transformation (FIT) program and highlighted its aim of helping the financial services sector of the country.
According to the report, “The FIT Programme aims to support the financial services sector, promote digital transactions, and enable the UAE’s competitiveness to become the financial and digital payment hub and a center of excellence for innovation and digital transformation through encouraging innovation and collaboration as well as competition in the financial sector.”
As per the recent press release of CBUAE, the FIAT program includes the implementation of 9 major initiatives. The first phase includes a range of digital payments infrastructure and services, such as launching a domestic card scheme, an instant payments platform, and issuing central bank digital currency for cross-border and domestic use. This digital payment motivation will drive financial inclusion, innovation, security and efficiency and bring a cashless society.
Mr. H.E. Khaled Mohammad Balama, the Governor of the CBUAE, mentioned that “The FIT Programme embodies the directions and aspirations of our wise leadership towards digitizing the economy and developing the financial sector. We are proud to be building an infrastructure that will support a thriving UAE financial ecosystem and its future growth.”
Further, Mr. Balama added, “We will work with our partners to implement the Programme, achieve its goals, accelerate the adoption of digital services in the financial sector and attract the best talent.”
The nine initiatives of the newly introduced Financial Infrastructure Transformation program by CBUAE are listed below:
1. Domestic Card Scheme: The United Arab Emirates’ first integrated, secure and efficient card payment platform to facilitate the increment of e-commerce and digital transactions inside the country.
2. eKYC: A secure and user-friendly platform to facilitate onboarding and ongoing customer due diligence.
3. Central Bank Digital Currency (CBDC): CBDCs for both cross-border payments and domestic use help to overcome the problems and inefficiencies of cross-border payments and drive innovation for domestic payments, respectively.
4. Open Finance: To foster innovation, competitiveness, and cooperation in the financial services sector through interconnectivity and interoperability among all players and institutions.
5. Supervisory Technology (SupTech): Advanced SupTech supporting the rules, regulations and administrative processes.
6. Innovation Hub: A collective platform for engagement, research and development for Fintechs.
7. Instant Payments Platform: A safe, well-organized, and strong payment platform that will support financial inclusion and enable a cashless society through digital payments.
8. Financial Cloud: A safe, secure, flexible, scalable, and reliable universal financial infrastructure.
9. Excellence & Customer Experience: Supporting exceptional customer experiences and fostering a culture of excellence throughout the financial sector.
Last week UAE’s Virtual Asset Regulatory Authority released new rules and regulations for cryptocurrencies. The regulations define the basic principles and objectives of digital asset issuance, giving license to cryptocurrencies and many more.