Central Bank of the UAE announces intent to launch a digital currency

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The UAE central bank is planning to roll out a digital currency as part of its 2023-2026 strategy, according to state news agency WAM.

Jurisdictions like ADGM and DIFC have introduced crypto regulations, and last year, the central bank had rolled out a virtual asset scheme. When a central bank introduces a digital currency it is expected to support the industry as assets will back it.

The WAM report said the strategy includes supporting digital transformation in the financial services sector by adopting the latest technologies in artificial intelligence and big data, developing a strong and secure financial cloud infrastructure and supporting the green economy in the UAE.

The new strategy also includes the use of technology in regulatory and insurance systems, in addition to the use of a digital identity infrastructure, to enhance financial inclusion and faster access to financial services.

The Securities and Commodities Authority (SCA) of the UAE had released a regulatory framework in 2020 for Crypto Assets. The purpose of this regulation is to regulate the offering, issuance, listing, and trading of crypto assets in the state, as well as associated financial activities. However, it excluded the Central Bank of UAE, crypto assets issued by the government and/or public undertakings, a currency, virtual currency, digital currency, unit of stored value, or any other payment unit issued through a system licensed, approved and authorised by Central bank from time to time.

An annual UBS survey of 30 leading central banks, highlighted the fact that though central bank officials have doubts over private cryptocurrencies, they are certain over the prospect of central bank digital currencies or official coins.

About 60 per cent of the respondents (central bank reserve managers) expect at least one G7 central bank to make digital currencies available to consumers in the next half-decade.

Over 80 per cent of central bank reserve managers said over the period, they expect the launch and accessibility of “wholesale” central bank coins to big financial institutions.

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