UAE Launched FIT Program to Issue CBDC for cross-border payments

New plans to introduce CBDC for domestic purposes and cross-border payments.
Crypto will play a vital role in UAE global trade market.

UAE has emerged as a buzzing hub for crypto and digital innovation. Recently the Central Bank of the United Arab Emirates (CBUAE) said it is working on new plans to introduce the Central Bank Digital Currency (CBDC). On Feb 12, the CBUAE newly launched the Financial Infrastructure Transformation (FIT) program, which was created as a part of the nation’s “We the UAE 2031” vision and National Digital Economy Strategy.

As per the CBUAE announcement, the FIT program included new plans to introduce CBDC for domestic purposes and cross-border payments. The program aims to support the financial services sector, promote digital transactions and “enable UAE’s competitiveness to become the financial and digital payment hub.”

Meanwhile, along with CBDC, nine more initiatives have been added to this program. The first stage mainly focused on digital payment infrastructures and services like the issuance of domestic card schemes, instant payments platform and launch of CBDC for international transactions and domestic uses.

And the second stage of the FIT program detailed the setting up of the Financial Cloud, innovation hubs for the finance sector and eKYC. “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,” CBUAE said.

Earlier on Jan 20, Thani Al-Zeyoudi, UAE’s minister of state for foreign trade, highlighted that cryptocurrency would play a vital role in the country’s global trade. He said the UAE government is working on crypto regulations to transform the Arabic country into a digital hub with crypto-friendly policies.

“We started attracting some of the companies to the country with the aim that we will together build the right governance and legal system, which are needed,” Al-Zeyoudi stated.

Saudi Arabia’s national banking regulator Saudi Central Bank (SAMA), discussed new plans to introduce CBDC working towards the long-term goal of transitioning to a cashless nation. The central bank said it has to observe closely whether to introduce a CBDC.

In 2019, SAMA collaborated with the UAE central bank to develop a project on CBDC called Project Aber. The project mainly examined how blockchain technology will help in cross-border payments. It also examined the relationship between currencies such as the Saudi Riyal and the Emirati Dirham.

SAMA has appointed Mohsen Al Zahrani to lead the Virtual Assets and CBDC program in September 2022. Recently, the Saudi British Bank (SABB) utilized blockchain technology to strengthen the “digitization of letters of credit.”

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing