To mark the 50th anniversary of the Central Bank of UAE, the first central bank digital currency (CBDC) transaction was completed on the mBridge platform.
The central banks’ chairman of the board, Sheikh Mansour, executed the 50 million ($13.6 million) dirham transaction to China, following an agreement to promote digital currency payments between the two nations.
Launched in 2021, the mBridge platform is a collaborative effort involving the central banks of Thailand, Hong Kong, China, and the UAE, along with the Bank for International Settlements (BIS). After completing its pilot phase in September of 2022 and commercially launching in September 2023, the platform enables multi-central bank digital currency transactions.
The Global CBDC Race
The development of CBDCs moved progressively forward in the latter half of 2023. With 130 countries exploring CBDCs, many have advanced in launching, piloting, and developing within this evolving landscape.
The Bahamas was the first to officially release its own digital currency, the Sand Dollar, on October 20, 2020. Initially announced in June 2018, this launch promotes financial inclusion, especially among remote islands.
Nigeria followed suit, launching its first CBDC, eNeira, on October 25. President Buhari stated that this launch would boost remittances, financial inclusion, cross-border trade, and simplify government welfare payments.
China’s electronic Renminbi, or e-CNY, launched in 2022 during a six-week pilot phase. Similar to the UAE’s Dirham, China’s e-CNY is integrated into the mBridge platform. Users can download the e-CNY app and top up their digital wallets through their bank accounts, enabling payments through smartphone QR code scanning with NFC capabilities.
Developing and deploying a CBDC entails navigating a complex path. Central banks grapple with a myriad of considerations, including establishing robust infrastructure capable of securely and efficiently handling millions of transactions. Integration poses another hurdle, requiring seamless compatibility with existing systems. Additionally, addressing privacy concerns while ensuring effective anti-money laundering measures further complicates the process.
