The United Arab Emirates' Central Bank (CBUAE) has indicated that it will launch its own digital currency over the next five years. The CBUAE's action is part of its 2023-2026 strategy, which states that it aspires to place itself among the top ten central banks in the world.
The CBUAE listed seven goals in its statement on Monday, including the issuing of the digital currency known as CBDCs or Govcoins, as well as encouraging digital transformation in the UAE's financial services sector using artificial intelligence and big data solutions.
Why UAE wants to launch its own Crypto Coin?
The blockchain craze has fueled a digital change in the banking sector, and cryptocurrencies are unmistakably here to stay. Because Bitcoin and its peers are not regulated by a central bank, they have opened the door to quick cross-border transactions, and because they are impossible to counterfeit, investors can't get enough of them.
Central banks all across the world are developing their own digital currencies to keep up with the emergence of these crypto coins, which are also getting interest from major payment networks like Visa and MasterCard. UAE has launched its own strategy to produce virtual cash called Govcoin, in order to participate in the financial sector's digital revolution, keeping true to its reputation for adopting the best in technology.
The move is part of a larger plan to provide high-tech solutions to the country's banking sector, including smart systems for producing and tracking digital currency. As AI and big data technology propel the Emirati fintech industry forward, insurance will also be monitored using intelligent techniques.
Recent Events that led to the launch
Recent events in the UAE have demonstrated a supportive attitude toward cryptocurrencies, particularly in Dubai, where the licensing authority began taking Bitcoin as payment. However, the administration has warned citizens about scams, advising them to be wary of fraudsters posing as well-known exchanges and promising unrealistic returns in order to deceive investors.
Apart from setting the basis for quick digital transactions via virtual currencies, the UAE's central bank also intends to employ Emiratis' digital IDs to provide hassle-free fintech services. The plan's overall goal is to place the UAE's financial authority among the top ten central banks in the world.
Late last year, the country collaborated with Saudi Arabia on the development of a digital currency. In comparison to Kuwait, which has raised reservations about the volatile nature of blockchain-based money, it has been more friendly to the crypto movement. Turkey went even farther and outlawed the use of cryptocurrencies in transactions, as well as those who trade in them.
Strategy for Launch
In addition to utilizing the UAE's digital ID infrastructure (UAE Pass) to bolster financial inclusion and easy access to financial services, the approach will see technology applied throughout inspection, monitoring, and insurance systems.
The CBUAE said in a statement that it intends to help the UAE's green economy initiatives as global ESG awareness grows, and that it will focus on establishing more innovative financial infrastructure to increase the UAE's competitiveness.
A survey titled 'Future Expectations and Needs of Partners Survey' is set to be undertaken as part of the CBUAE's plans on July 15, 2021.