The UAE has announced plans to launch a digital currency as legal tender, with the Central Bank of the Emirates leading the efforts. Governor Khaled Al-Amaa emphasized the importance of digital transformation in the financial sector, stating that it is a top priority to enhance growth and confidence in the sector. The Central Bank has developed a regulatory framework for virtual assets to ensure safe and diverse payment systems in the country.
In addition to its work on digital currency, the Central Bank has implemented measures to improve the monetary framework of the dirham. This includes foreign currency swap facilities and liquidity facilities in US dollars, which have contributed to steady development and solid performance in the financial and banking sectors throughout 2023. Short-term interest rates in the UAE have risen in line with global trends, while inflation has witnessed improvement.
The Central Bank is also focusing on digital transformation within financial infrastructure through initiatives such as open finance and supervisory technology. These initiatives aim to enhance growth and confidence in the financial sector while maintaining financial and monetary stability. The Al-Ittihad Payments Company has been established by the Central Bank to manage financial infrastructure for payment systems, providing innovative digital payment solutions.
Governor Al-Amaa also discussed other initiatives by the Central Bank aimed at supporting innovation and strengthening regulatory frameworks in areas such as climate-related risks, virtual assets, open finance, and supervisory technology. These efforts are expected to continue driving growth and development in the financial sector in the UAE.
Overall, these developments demonstrate how important it is for countries like UAE to embrace new technologies while maintaining strong regulations that protect consumers’ interests. As more countries move towards adopting cryptocurrencies as legal tender, it will be interesting to see how they navigate this new landscape while ensuring stability and security within their respective economies.
