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UAE Central Bank has introduced a program that includes a new digital currency, open finance and domestic card payment platform to boost digital transformation in financial services.
An official announcement came from CBUAE to launch a new program aimed at accelerating digital transformation in the financial industry, with initiatives covering open finance and a new digital currency.
The program also includes a domestic scheme, financial cloud supervisory technology, and an instant payment platform, the Central Bank revealed on Sunday.
New CBDC (Central Bank Digital Currency) will be used for domestic operations and cross-border transactions to “address the problems and inefficiency of cross-border payments and help drive innovation for domestic payments respectively”, the regulator said.
“The FIT programme embodies the directions and aspirations of our wise leadership towards digitising the economy and developing the financial sector,” said Khaled Balama, the Governor of the Central Bank.
“We are proud to be building an infrastructure that will support a thriving UAE financial ecosystem and its future growth.”
Amid the growing demand for cryptocurrencies as an asset class among retail and institutional investors, Central banks are confident in developing digital currencies.
The Bank of England and the Treasury have planned to launch a new CBDC, including the new pound, backed by the state bank, which could be launched in the upcoming years.
Oman’s Central Bank is also implementing open banking services with new digital currency, reported by the state’s new agency last year.
The rapid development of CBDCs could help boost the stability and financial inclusion of digital currencies. Moreover, the CBDCs will continue to gain momentum as regulators keep optimising them to replace cash with digital central bank money, said Boston consulting group in a recent report.
The new domestic card scheme will feature the UAE’s “first unified, secured and efficient card payment platform to facilitate the growth of e-commerce and digital transactions in the country”, the Central Bank said.
“These digital infrastructures will improve regulatory compliance, reduce the cost of operation, enhance innovation and customer experience, and most importantly, strengthen their security and operational resilience,” the regulator said.
Last month, the CBUAE launched new guidelines for licenced FIs, including banks, finance firms, exchange houses and insurance organisations, to counter money laundering and financing of terrorism.