UAE Central Bank officials have called for a comprehensive regulatory framework for central digital currencies that would facilitate, accelerate and reduce the cost of cross border monetary operations. The call came during UAE’s Central Bank participation at the fifth International Financial Architecture (IFA) Working Group meeting within the G20 Finance Track for 2022, which was held in a hybrid format on 22nd and 23rd September 2022.

Thiscomes after The Innovation Hub of the Hong Kong Monetary Authority, BIS (Bank of International Settlements) and the Central Bank of the UAE announced on twitter the completion of the first CBDC pilot involving real value transactions and four jurisdictions, using mBridge, custom developed DLT platform.

As per the tweet, 20 banks participated in the final CBDC pilot, with over 160 transfers and FX exchanges carried out, totaling $171 million HK dollars ( $22 million)  in transfers and FX exchanges and $91 HK million in issuances equivalent to ( $12 million) .”

The Central Bank of the UAE (CBUAE) participated in “mBridge” project with partners from the Bank for International Settlements (BIS), Innovation Hub Centre in Hong Kong, the Hong Kong Monetary Authority (HKMA), the Bank of Thailand (BoT), and the Digital Currency Institute of the People’s Bank of China (PBoC).

In 2021, the Central Bank UAE completed the first pilot phase of mBridge with the participation of five banks located in the UAE including First Abu Dhabi Bank, Emirates NBD, Dubai Islamic Bank, HSBC, and Standard Chartered Bank, in  fifteen cases. International trade settlement was prioritized in the identified business test cases given the high volume of trade between the four jurisdictions, amounting to US$731 billion.

At the time of the press communications in 2021 it stated, “The project has now identified and will start to put through, business test cases based on historical transactions to test the recently-developed mBridge Trial Platform. In addition, a roadmap for the mBridge project’s target achievements in 2022 has been established, using an iterative and agile process to develop a minimally viable product that could support the full process of international trade settlement and other use cases.”

Asma Al Zarooni, Head of Exchange of Tax Information Section at the Ministry of Finance, and Khalifa Al Faheem, Director Monetary Operations at Central Bank of the UAE, who, participated at the Fifth International Financial Architecture (IFA) Working Group meeting within the G20 Finance Track for 2022, called for a comprehensive regulatory framework for central digital currencies that would facilitate, accelerate and reduce the cost of cross border monetary operations, and also previewed UAE’s experience in the mBridge project for building multi central bank digital currencies (CBDC). Attendees also discussed central bank digital currencies for cross-border payment and implication on the international monetary system and capital flows.

A detailed progress report will be released in October 2022, which will cover the technical design, legal, policy, regulatory considerations and future roadmap, during the Hong Kong Fintech Week October 31st- November 4th. 

Prior to that UAE Central Bank and Saudi Central Bank ( SAMA) had worked on the wholesale CBDC project called ABER.