Central Bank of UAE (CBUAE) Selects R3, G42 Cloud and Clifford Chance to Assist in Implementing its CBDC Strategy
- 04.04.2023 11:20 am
The Central Bank of the UAE (CBUAE) has launched its Central Bank Digital Currency (CBDC) Implementation Strategy in collaboration with R3, G42 Cloud and Clifford Chance. For Phase 1, R3 and G42 Cloud have been selected as the technology and infrastructure providers of the initiative respectively, while Clifford Chance will provide critical legal oversight for the strategy. The strategy, which represents one of nine initiatives in the CBUAE’s Financial Infrastructure Transformation (FIT) Programme, sets out a roadmap for applying CBDC across a range of domestic and cross-border use-cases in the region.
The CBUAE’s commencement of its CBDC strategy represents a major milestone in the UAE’s path towards CBDC issuance. The first phase of the strategy, which is expected to take place over the next 12 to 15 months, comprises three primary pillars. These include initiating real-value cross-border CBDC transactions for international trade settlement, proof-of-concept work for bilateral CBDC bridges with India, and finally, proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage.
As part of the CBUAE’s digital transformation programme, the implementation of the CBDC strategy will aim to address the pain points of cross-border payments, enhance financial inclusion and further strengthen the UAE's payment infrastructure. The technological support of R3 will enable CBUAE to ensure the readiness of the UAE for the potential future tokenisation of financial and non-financial activities, in addition to the digitalisation of other financial services.
R3’s Corda – the world’s leading permissioned distributed application platform - is specifically designed for institutions operating in highly regulated environments, making it an ideal foundational technology for central banks to issue and distribute CBDCs. Its interoperability and asset fluidity means that central banks can move digital currencies openly and freely across network boundaries, using well-defined trusted exchange protocols that meet regulatory demands for privacy and security.
David E. Rutter, CEO at R3, comments; “This is another landmark moment in bringing CBDCs even closer to production and issuance. CBDCs can strengthen our financial market infrastructure in several ways, including more efficient cross-border payments, faster settlement time periods and the streamlining of multi-party processes. The CBUAE has made a significant step forward in realising these benefits. We are honoured and excited that R3 has been selected to design and build CBUAE’s CBDC ecosystem in this innovative move towards building a more open, trusted, and enduring digital economy. We look forward to supporting the CBUAE in the next stage of its CBDC journey.”
R3’s selection as the technology provider for Phase 1 of the CBUAE’s CBDC strategy adds to the growing number of digital currency initiatives being built on Corda.
As the infrastructure provider for the CBUAE's CBDC Implementation Strategy, G42 Cloud will play a critical role in the successful deployment and adoption of the CBDC system. The company's commitment to innovation and excellence in cloud technology will enable the CBUAE to offer a modern and efficient CBDC system that meets the needs of the UAE's rapidly evolving digital economy.
Talal Al Kaissi, CEO at G42 Cloud, comments: “We’re thrilled to be supporting the CBUAE in the development of its digital dirham. This collaboration represents an important milestone in the digitalisation of the UAE’s monetary and payments framework and ensuring that the country remains at the forefront of financial services innovation. As a company founded in the UAE, we have seen first-hand the country’s rapidly advancing status as a global fintech hub and are excited to be working with the CBUAE in leading its digital transformation. We look forward to working with the Central Bank and R3 to deliver a cutting-edge CBDC infrastructure that meets the highest standards of efficiency, security, and innovation.”
Jack Hardman, Partner at Clifford Chance and Head of Fintech in the Middle East, comments: “As CBDC development moves from research to real-life building, it is vital that central banks are aware of the legal implications of any chosen design feature or strategy, in addition to how this emerging technology interacts with existing regulations. Clifford Chance has an established track record as a leading advisor in the fields of financial services and technology, and we look forward to working with the CBUAE on its CBDC implementation strategy.”